Energy sanctions imposed on Russian oil have a “limited impact” on production, the International Energy Agency (IEA) states in a report.
Despite the Western countries pledging to isolate President Putin’s regime, oil production has fallen by only 3% since Ukraine’s invasion. The IEA found that Russia produced 310,000 barrels per day in July, below pre-invasion levels, while total export levels were down by 580,000 barrels daily.
The agency’s report said that buyers from Asia stepped in to acquire cheap crude from Russia. Demand from India, China, and Turkey has increased along with domestic market demand, diminishing upstream losses.
Russian exports to Europe, the US, Japan, and Korea fell by almost 2.2m barrels a day since the invasion. In June, China moved ahead of the EU as the biggest importer of Russian crude oil.
Russia generated $19bn in oil exports last month, and $21bn in June, as stated in the report. It said: “The outlook for world oil supply has been revised upward, with more limited declines in Russian supply than previously forecast.”
According to the agency, Europe will be indebted to heavyweight oil majors in Saudi Arabia this winter due to a sharp decline in Russian gas shipments. The report also stated that global oil consumption would increase by 2.1 million barrels per day as factories and power plants try to avoid skyrocketing gas prices.
“Europe is worried about spare capacity – it’s basically only Saudi Arabia and the UAE that are holding any substantial amount of spare capacity”, Toril Bosoni, IEA’s oil market head, told Bloomberg TV.
Most EU countries have pledged to decrease their gas usage by 15% from August 2022 to March 2023. On this, the report said: “We believe that this will raise oil consumption by around 300,000 barrels per day over the following six quarters.”