Russian oil output seen to fall by a quarter next month: IEA

Russian oil output seen to fall by a quarter next month: IEA

Bloomberg / London

Russia’s oil output may slump by about a quarter next month, inflicting the biggest supply shock in decades as buyers shun the nation’s exports following its invasion of Ukraine, the International Energy Agency said.

“The implications of a potential loss of Russian oil exports to global markets cannot be understated,” the Paris-based agency said in its monthly report on Wednesday. “While it is still too early to know how events will unfold, the crisis may result in lasting changes to energy markets.”

Sanctions on trade with Moscow and widespread condemnation of its aggression have rendered Russian oil almost untouchable to traders, with companies from TotalEnergies SE to Shell Plc pledging to curtail purchases. International crude prices rocketed to a 13-year high near $140 a barrel last week, though have since pulled back sharply.

Russian oil production could plunge by 3mn barrels a day to 8.6mn a day from next month, further squeezing a world market already strained by the post-pandemic rebound in demand, said the agency, which advises most major economies.

World markets now face a shortfall in the next two quarters instead of previously anticipated surpluses, the IEA said. That will force developed nations to further deplete oil