Global oil output was already hard pressed to meet the sharp rebound in economic activity in the wake of the COVID pandemic – then came Russia’s invasion of Ukraine.
The International Energy Agency on Tuesday said sanctions and wary buyers were set to take 3 million barrels of Russian oil and products off the market, setting back hopes of a cooling of commodity prices that have sent inflation to multi-decade highs.
“The prospect of large-scale disruptions in Russian production due to wide-ranging sanctions as well as decisions by companies to shun exports after Moscow’s invasion of Ukraine is threatening to create a global oil supply shock,” the IEA said.
The Paris-based agency projected in its last monthly oil market report (OMR) before Moscow’s invasion of its neighbour that oil supply would exceed total global demand in the first quarter of this year – the first time since the second quarter of 2020.
Now, it sees the world facing a supply deficit of 700,000 bpd in the second quarter and demand of 100.1 million bpd not being matched by supply until the fourth quarter.