The IEA further downgrades its forecast for oil demand

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This content was published on May 12, 2022 – 08:19

Paris, May 12 (EFE).- The International Energy Agency (IEA) has further revised down its forecasts for global oil demand for this year and trusts that this, and the additional contribution of the large producers of the Middle East, allow avoiding a deficit due to the drop in Russian exports.

In its monthly report on the market published this Thursday, the IEA reduces by 70,000 barrels per day the demand projections it had made in April, when it had cut those of March by 260,000 barrels.

The main reason is the sharp slowdown in consumption in China due to the covid restrictions, which translates into 890,000 barrels per day less in the second quarter than it had estimated just a month ago.

It is also weighing the effect for consumers around the world of the rise in the price of a barrel and even more so the supply problems of some fuels (such as diesel in Europe) due to the stoppage of imports from Russian refineries.

In the end, the agency calculates that the average consumption of crude oil in 2022 in the world will be 99.4 million barrels, that is, 1.8 million more than last year.

That growth has been concentrated in the first three months of the year due to the lifting of coronavirus restrictions in advanced economies. In that first quarter, the increase in consumption was 4.4 million barrels per day on a global scale.

In the fourth quarter, however, the organization’s experts forecast that demand will be 230,000 barrels per day lower than in the same period a year earlier.

Part of this contraction is explained by the blow to the Russian economy from its international isolation, which has already begun to be felt, for example with a 13% drop in the consumption of kerosene for aircraft despite the increase in military needs for the invasion of Ukraine.

The number of flights in that country has gone from almost 11,000 daily in February to only 3,000 in April.

On the production side, the sanctions are taking their toll on Russia, albeit somewhat less than the IEA had anticipated. In April, according to their data, Moscow put 9.1 million barrels per day on the market, 900,000 less than in March.

That trend should continue in May, with a cut of another 600,000 barrels per day, which would mean 1.6 million less than in February, when the war began. It could become more than 2 million reduction in June and close to 3 million in July, especially if the European Union adopts its embargo plan on Russian crude.

If these figures are confirmed, about which there is great uncertainty due to the rapid evolution of the situation, Russian oil production for this year as a whole could remain at an average of 9.6 million barrels per day, which would be the lowest since 2004.

The IEA notes that within the cartel formed by the Organization of the Petroleum Exporting Countries (OPEC) and its partners, the main one being Moscow, only Saudi Arabia and the United Arab Emirates (UAE) have significant margins to increase prices. pumping this year and offset the drop in Russian exports. EFE

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