Russian oil production is expected to drop by a quarter in April as buyers avoid transacting with the country after its conflict with Ukraine, according to the International Energy Agency.
- The IEA expects Russian oil output to drop by 3 million barrels a day to 8.6 million daily in April, exacerbating the ongoing global supply constraints with countries rebounding from the COVID-19 pandemic.
- Traders have been avoiding Russian oil exports due to the sanctions on trade implemented against Russia for its invasion of Ukraine. International crude prices have surged to a 13-year high but have since pared down.
- The agency also expects global markets to record a shortfall in the next two quarters instead of the earlier expected surpluses, likely to force developed nations to use up their inventories which are already at historic lows.
- The IEA noted that the impact of lower Russian oil exports “cannot be understated” as this could bring in “lasting changes” to energy markets. It noted, however, that it is still too early to assess how events would go.