Sanctions Squeeze: The Future of Russian Oil Supply

The latest U.S. sanctions on Russian oil could potentially disrupt supply chains, yet the IEA's forecast remains optimistic, predicting a market surplus for 2025. However, tighter sanctions and cold weather could increase oil prices, while non-OPEC+ countries are anticipated to drive supply growth.

In a recent development, the United States has unleashed sanctions on Russian oil, a move that could significantly disrupt Russia's oil supply chains. The International Energy Agency (IEA) cautioned in its latest monthly report, released on Wednesday, that these new sanctions could potentially tighten the global oil market.

Despite this, the IEA maintains a positive outlook, projecting a market surplus for the year. The agency noted that supply growth, primarily driven by countries outside the OPEC+ alliance, will likely outstrip modest world demand growth. These new sanctions target entities handling over a third of Russian and Iranian crude exports in 2024, though their full impact remains uncertain.

The report highlights the complexities of the current global oil landscape. The IEA revised its 2025 global oil demand growth forecast to 1.05 million barrels per day. As non-OPEC+ supply surges and cold weather strikes, the market could face price hikes. However, OPEC+ might counter this by easing output cuts if deemed necessary.

(With inputs from agencies.)