16 Mar 2022 13:10

Russian oil output could be shut in at 3 mln bpd in April owing to sanctions, buyers shunning exports - IEA

MOSCOW. March 16 (Interfax) - Russian oil output could be shut in at 3 million barrels per day in April amid the sanctions and foreign buyers shunning exports, the International Energy Agency (IEA) said in a report.

"The prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock. We estimate that from April, three million barrels of Russian oil output could be shut in as sanctions take hold and buyers shun exports. OPEC+ is, for now, sticking to its agreement to increase supply by modest monthly amounts. Only Saudi Arabia and the UAE hold substantial spare capacity that could immediately help to offset a Russian shortfall," according to the report.

The IEA notes that Russian oil exports could decrease proportionally to the decline in production. Russia currently supplies around 8 million bpd of oil and petroleum products to global markets. Exports continue on contracts already signed, with new deals nearly exhausted.

"Urals oil is offered at record discounts, though demand is still limited. Some Asian oil importers have expressed interest in much cheaper barrels, but, for the most part, they buy the bulk of their volumes from traditional suppliers in the Middle East, Latin America, and Africa," the IEA said.

The IEA believes that a decrease in oil supplies on the market could affect the operations of oil refineries, especially those in Europe that are already seeking alternative sources to supply crude.