Oil markets struggling to navigate supply losses and dislocations stemming from Russia’s invasion of Ukraine received much needed support from US and IEA coordinated stock releases. IEA member countries agreed on 1 April to tap their emergency reserves for the second time in the space of a month, this time to the tune of 120 mb. The record volumes will provide welcome relief to an already tight oil market that’s facing heightened uncertainty amid the multitude of repercussions stemming from sanctions and embargoes targeted at Russia by the international community and consumer boycotts. Crude prices have eased by nearly $10/bbl following announcements of the US and IEA stock releases, with ICE Brent last trading at around $104/bbl.
Russian oil supply and exports continue to fall. So far in April, roughly 700 kb/d of production has reportedly been shut in. We assume these losses will grow to an average 1.5 mb/d for the month as Russian refiners extend run cuts, more buyers shun barrels and Russian storage fills up. From May onwards, close to 3 mb/d of Russian production could be offline due to international sanctions and as the impact of a widening customer-driven embargo comes into full force.
While some buyers, most notably in Asia, increased purchases of sharply discounted Russian barrels, traditional customers are cutting back. For now, there are no signs of increased volumes going to China, where refiners have cut runs as a recent surge in Covid cases and new restrictions have dented oil demand.
https://www.iea.org/reports/oil-market-report-april-2022?utm…
Jaak