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Russian oil production and exports have been holding resilient in recent months, with much smaller declines than initially expected, the International Energy Agency (IEA) said on Thursday. But the agency’s report warned of a 20% drop in Russia’s production if its oil doesn’t find a home with Asian buyers when the EU embargo takes full effect in February 2023.
In its Oil Market Report published today, the IEA revised its outlook for global oil supply for 2022 upward due to “more limited declines in Russian supply than previously forecast.”
Russian crude and refined product exports to Europe, the U.S., Japan, and South Korea have dropped by nearly 2.2 million barrels per day (bpd) since the start of the war in Ukraine. However, the rerouting of oil flows to India, China, Türkiye, and others, along with seasonally higher Russian domestic demand, has mitigated Russia’s production losses, the international agency said.
By July, Russia’s oil production was only 310,000 bpd below pre-war levels, while total oil exports were down by just 580,000 bpd, the IEA noted today.
A few months ago, the agency expected millions of barrels per day of losses in Russian production and supply to the market.
Still, the EU embargo on Russian crude and product imports from February 2023 is expected to result in further declines in Russian oil production, as some 1 million bpd of products and 1.3 million bpd of crude would have to find new homes, the agency said.
In July specifically, Russian oil exports dropped by 115,000 bpd to 7.4 million bpd, compared to around 8 million bpd at the start of this year, the IEA has estimated.
Crude and oil product flows to the U.S., the UK, EU, Japan, and South Korea have slumped by nearly 2.2 million bpd since the Russian invasion of Ukraine. But two-thirds of those volumes have been rerouted to other markets.
Due to lower export volumes and lower oil prices, Russia’s export revenues declined from $21 billion in June to $19 billion in July, per the IEA’s estimates.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com