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Russian isolation won’t spark ‘acute’ oil supply crunch: IEA

PARIS (AFP) – Russia’s growing isolation will not create an “acute” global oil supply crunch as production from other countries is rising and demand from China is falling, the International Energy Agency (IEA) said yesterday.

The IEA, which has previously warned that Moscow’s invasion of Ukraine could spark a global supply “shock”, said European Union and G7 plans to ban Russian oil imports would “accelerate the reorientation of trade flows” and force Russia to slash production.

“Even so, steadily rising output elsewhere, coupled with slower demand growth, especially in China, is expected to fend off an acute supply deficit in the near term,” the agency said in a monthly report.

Supply fell by nearly one million barrels per day in April, which could widen to three million barrels per day in the second half of the year, the agency said.

Russia’s invasion of Ukraine sent oil prices soaring, but strict lockdowns in China, the world’s biggest importer of crude, has since weighed on demand.

The IEA said “steadily rising” output from the US and Middle Eastern members of the OPEC+ oil cartel will help offset losses from Russia.

Excluding Russia, world oil output is set to grow by 3.1 million barrels per day from May through December, it said.

World oil demand growth, meanwhile, is forecast to slow to 1.9 million barrels per day in the second quarter. But it is expected to grow again from April to August as driving and jet fuel consumption pick up during the holiday season.

Demand for 2022 is expected to reach 99.4 million barrels per day.