War in Ukraine: No oil shortage on the horizon despite Russia’s isolation

The world should not run out of oil, at least in the short term, according to the International Energy Agency.

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MDespite Russia’s growing isolation, amid slowing demand and rising production in other countries, the world is unlikely to run out of oil in the near term, the International Energy Agency said on Thursday ( OUCH).

Production increases elsewhere

“The steady rise in production elsewhere (than in Russia), with a slowdown in demand growth, particularly in China, should push back any acute shortage of supply in the short term”, judges the agency in its monthly oil report.

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.

Caution is in order

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.

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 nearly 1 mb/d in April, losses could increase to nearly 3 mb/d in the second half of the year,” the authors predict.

But the IEA is counting on the increase in volumes from the United States and Middle Eastern countries 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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