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Russia’s oil production could drop by 1.4 million barrels per day (bpd) in 2023 after the EU embargo on crude oil imports by sea kicks in next month, according to the International Energy Agency (IEA).
The EU had reduced its crude oil imports from Russia to 1.4 million bpd by October, but once the embargo takes effect, Moscow could struggle to place those barrels with its current biggest buyers China, India, and Turkey, as no significant buying outside those countries has appeared despite massive discounts, the IEA said in its Oil Market Report on Tuesday.
“A further rerouting of trade should help ease pressures but a shortage of tankers is a major concern, especially for ice-class vessels required to load out of Baltic ports during winter,” the international agency said.
The EU has managed to cut some of its imports of Russian crude and products, but more than 2 million bpd of crude oil and products will have to be replaced when the EU embargoes enter into force, the IEA noted.
By October, the EU had already reduced Russian crude oil imports by 1.1 million bpd, but it was still buying 1.4 million bpd. For diesel, the EU had cut imports by 50,000 bpd to 560,000 bpd.
“When the crude and product embargoes come into full force in December and February, respectively, an additional 1.1 mb/d of crude and 1 mb/d of diesel, naphtha and fuel oil will have to be replaced. For crude oil, no significant buying from Russia outside China, India, and Türkiye has appeared despite massive discounts,” the IEA said.
The embargoes will pressure oil market balances, on top of oil inventory levels in developed economies at their lowest since 2004, the agency said.
“A proposed oil price cap may help alleviate tensions, yet a myriad of uncertainties and logistical challenges remain,” the IEA noted.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.