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EU embargo will crater Russian oil production, IEA reports

Washington Examiner logo Washington Examiner 9/14/2022 Breanne Deppisch
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The European Union’s forthcoming Russian energy embargo is expected to decrease Russia's oil output significantly in the coming months, according to the International Energy Agency's new report.

In its monthly report, the IEA forecasts that Russian oil production will fall by roughly 1.9 million barrels per day beginning in December, when the EU’s ban on Russian seaborne crude imports is slated to take effect.

And in February 2023, when EU sanctions expand to include products such as diesel fuel, the IEA said it expects Russian oil production will drop by 17% compared to pre-war levels.

Until now, Russian energy exports have remained resilient in the face of Western sanctions, due in large part to buyers such as China, India, and Turkey that have eagerly purchased Russian crude at discounted rates.

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In last month’s report, the IEA noted that Russian oil output had declined by less than 3% since its invasion of Ukraine, with July production down just 310,000 barrels per day compared to pre-war levels.

Russian crude imports to Europe have fallen to 1.7 million barrels per day since the start of 2022, the IEA report noted, while other exporters, including the United States, Norway, and Saudi Arabia, have increased their shipments to the bloc.

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"An additional 1 mb/d of products and 1.4 mb/d of crude will have to find new homes," the IEA said in its report. "An EU ban on maritime services may force further reallocations from third countries not agreeing to the proposed G7 price cap."

The cap in question was proposed by finance ministers earlier this month and would be meant to erase Russia's oil profits and limit its war funding while allowing it to contribute to global supply.

 

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Tags: Energy and Environment, News, Oil, Russia, War in Ukraine, Foreign Policy

Original Author: Breanne Deppisch

Original Location: EU embargo will crater Russian oil production, IEA reports

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