The International Energy Agency (IEA) stated that sanctions and consumer reluctance to buy Russian oil will take full effect starting in May, Reuters reported.
Expected decreased demand in China, output increases from OPEC+ and beyond, as well as a record draw on emergency oil reserves by the US and its IEA member allies, should prevent a significant shortfall, according to the agency.
IEA said that for the time being, we expect (April) losses to rise to an average 1.5 million bbl/d for the month as Russian refiners tighten their belts and purchasers retreat. Adding that as the full impact of a growing customer-driven voluntary embargo on Moscow, up to 3 million bbl/d are expected to be offline from May onwards.
The Russian shutdown is taking longer than the International Energy Agency expected last month, when it predicted that the 3 million bbl/d loss would begin in April.
Paris-based agency stated that while some importers, particularly in Asia, have increased their purchases of Russian oil, there has been no hint of increased purchases from China.
The IEA lowered its global oil demand prediction for the year by 260,000 bbl/d due to Chinese coronavirus lockdowns.
Lower demand expectations and consistent output increases from Middle East OPEC+ members, as well as the United States and other non-OPEC+ countries, should bring the market back into equilibrium,” the IEA added.
The agency stated that combined output from OPEC+ members was 1.5 million bbl/d below target in March, the largest undershoot since the producer group implemented cutbacks in May 2020, and that the shortages are expected to worsen.