Russia's crude oil production drops by only 3%... China, India, and Turkey increase imports of Russian crude oil
[Asia Economy Reporter Park Byung-hee] The International Energy Agency (IEA) analyzed that the impact of Western sanctions on Russian crude oil production was limited.
According to major foreign media on the 11th (local time), the IEA stated in a report released that day that Russia's daily crude oil exports to the United States, Europe, Japan, and South Korea decreased by about 2.2 million barrels after the outbreak of the Ukraine war. However, exports to China, India, and T?rkiye increased, which helped the Russian government reduce losses. The IEA assessed that the decrease in Russia's daily crude oil exports was only 580,000 barrels, indicating that Western sanctions did not significantly damage Russian crude oil production.
Russia's daily crude oil production last month also decreased by only 310,000 barrels compared to before the war. The decline is less than 3% compared to pre-war levels.
The IEA analyzed that Asian countries are increasing imports by taking advantage of the drop in Russian crude oil prices. In June, China surpassed the European Union (EU) to become the largest importer of Russian crude oil. The IEA explained that compared to early this year, the discount on Russian crude oil relative to U.S. and European crude oil has also narrowed. It estimated that Russia earned approximately $21 billion and $19 billion from crude oil exports in June and July, respectively.
The IEA revised upward its forecast for Russia's daily crude oil production by 500,000 barrels for the second half of this year and by 800,000 barrels for next year. This adjustment was made alongside upward revisions to global crude oil demand forecasts for this year and next year.
Despite concerns about a global economic slowdown, the IEA expects global crude oil demand this year to increase by 2.1 million barrels to 99.7 million barrels per day compared to last year. The forecast for this year's global crude oil demand was raised by 380,000 barrels from previous estimates. The IEA also expects next year's daily global crude oil demand to increase by another 2.1 million barrels to reach 101.8 million barrels.
The IEA diagnosed that the surge in European natural gas prices following the outbreak of the Ukraine war has led to significant demand for substituting gas with crude oil. Accordingly, despite forecasts of a global economic slowdown, crude oil demand is expected to increase this year.
The IEA analyzed that the EU's gas consumption reduction plan will have the effect of increasing daily crude oil demand by 300,000 barrels over six quarters until the end of next year. The EU has decided to reduce gas consumption by 15% from this month through March next year.
The IEA also cited the heatwaves that struck the world this summer, which increased electricity demand, as a cause of the rise in crude oil demand.
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