Russia’s growing isolation will not create an “acute” global oil supply crunch as production from other countries is rising and demand from China is falling, the International Energy Agency said Thursday.
The IEA, which has previously warned that Moscow’s invasion of Ukraine could spark a global supply “shock”, said EU and G7 plans to ban Russian oil imports would “accelerate the reorientation of trade flows” and force Russia to slash production.
“Even so, steadily rising output elsewhere, coupled with slower demand growth, especially in China, is expected to fend off an acute supply deficit in the near term,” the agency, which advises developed countries, said in a monthly report.
After supply fell by nearly one million barrels per day in April, losses could widen to three million barrels per day in the second half of the year, the agency said.
The United States and other rich nations decided to tap their emergency oil reserves in a bid to tame crude prices.
Russia’s invasion of Ukraine on February 24 sent oil prices soaring, but a strict Covid lockdown in China, the world’s biggest importer of crude, has since weighed on demand.
The IEA said “steadily rising” output from the United States and Middle Eastern members of OPEC+ will help offset losses from Russia.
Excluding Russia, world oil output is set to grow by 3.1 million barrels per day from May through December, it said.
World oil demand growth, meanwhile, is forecast to slow to 1.9 million barrels per day in the second quarter, more than half the pace from the first three months of the year.
But it is expected to grow again from April to August as driving and jet fuel consumption pick up during the holiday season.
Demand for 2022 is expected to reach 99.4 million barrels per day, an increase of 1.8 million barrels per day.