The International Energy Agency (IEA) said that oil demand growth for this year will be lower than expected amid fear that Russia supply shortages will create a price shock in the market.
Global oil demand growth in 2022 will be 35% lower than previously forecast as surging prices triggered a reduction in the outlook for economic growth.
The Paris-based agency lowered forecast for world oil demand for the second to fourth quarters of 2022 by 1.3 million bpd noting surging commodity prices and sanctions on Russia “are expected to appreciably depress global economic growth” and impact inflation.
In its latest monthly oil report, the agency said that Russian output will slump by a quarter in April as economic sanctions bite and buyers hold off.
IEA added that three million barrels per day (bpd) of Russian crude and products may not find their way to the market at the start of next month.
“We see a reduction in total exports of 2.5 million bpd, of which crude accounts for 1.5 million bpd and products 1 million bpd,” the IEA said. “These losses could deepen should bans or public censure accelerate.”
It slashed its growth forecast by 950,000 bpd to 2.1 million bpd for an average of 99.7 million bpd for the full year. This is a third year of demand below pre-COVID levels.
Brent crude (BZ=F) rose 2.2% to $102.07 a barrel. US light crude (CL=F) was 1.5% higher to $97.87 in electronic trading on the New York Mercantile Exchange at the time of writing.
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