- The International Energy Agency said the world can withstand lower oil output from Russia amid wartime sanctions.
- This counters the IEA’s previous warning of a potential “global supply shock.”
- Meanwhile, OPEC cut its 2022 global oil demand growth forecast by 310,000 barrels per day.
After predicting a “global supply shock” in March, the International Energy Agency reframed its outlook Thursday, saying the world will be able to withstand lower oil output from Russia amid wartime sanctions.
“Over time, steadily rising volumes from Middle East OPEC+ and the U.S. along with a slowdown in demand growth is expected to fend off an acute supply deficit amid a worsening Russian supply disruption,” the IEA said in its monthly report.
The Paris-based agency had previously warned of the prospect of “large-scale disruptions” to Russian supply and production, forecasting that upwards of 2.5 million barrels per day of exports could be at risk.
Its latest take, however, lowers that figure since only 1 million barrels per day had shut down last month. But if sanctions weigh on demand further or expand, then the amount of shut-in oil could climb to 1.6 million barrels per day in May, 2 million in June and nearly 3 million in July and beyond.
The forecast comes as the EU edges closer to imposing a phased-in embargo on Russian oil. The US and Canada already banned imports of its oil, and the UK will slowly wean off Russian oil. The private sector has gone even further via so-called self-sanctioning.
Meanwhile, demand for oil is expected to slow due in part to China’s strict COVID-19 lockdowns.
“Soaring pump prices and slowing economic growth are expected to significantly curb the demand recovery through the remainder of the year and into 2023,” the IEA noted.
OPEC also sees slower demand and cut its 2022 global growth forecast by 310,000 barrels per day.
“Demand in 2022 is expected to be impacted by ongoing geopolitical developments in Eastern Europe, as well as COVID-19 pandemic restrictions,” the OPEC report reads.