A rise in production outside of Russia and a slowdown in demand growth will push back any acute supply shortfalls.
The world is unlikely to run out of oil in the near term despite Russia’s growing isolation amid slowing demand and rising production in other countries, the International Energy Agency said on Thursday ( OUCH). “Steadily rising production elsewhere (other than Russia), with slowing demand growth, particularly in China, should fend off any acute short-term supply shortfalls“Judges the agency in its monthly oil report.
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Despite the current uncertainties, she also notes that while volatility remains high in the market, prices are moving in a tighter and lower range of $10 a barrel above $100.
The IEA predicts an increase of 1.8 million barrels per day (mb/d) in demand this year, to reach 99.4 mb/d in total. But the pace of growth is expected to slow down over the course of the year, with slowing global growth, rising prices at the pump and the return of severe lockdowns in China.
However, the agency warns about the summer, with the season of major car travel in North America and the resumption of air traffic. If refiners can’t keep up, it could have an impact on consumers.
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A decline in supply that could continue
On the supply side, the agency notes Russia’s growing isolation after its invasion of Ukraine, as the West considers an embargo and major brokerages turn away from Russian oil.
“After a decline in supply of almost 1 mb/d in April, losses could increase to almost 3 mb/d in the second half of the year“, predict the authors.
But the IEA is counting on the increase in volumes from the United States and countries in the Middle East to compensate for these losses. She thus thinks that world production excluding Russia should increase by 3.1 mb/d between May and December.
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