IEA warns of global risks due to US sanctions against Russian oil

The International Energy Agency (IEA) on November 13 pointed to a "significant downside risk" to Russia's oil production forecast due to the latest US restrictions. While crude flows have remained stable so far, the disruption of the global chains of Russia's largest majors threatens to have global implications, the agency warned.

In October, the U.S. imposed its toughest energy sanctions against Russia, blacklisting Rosneft and Lukoil, two of Russia's largest oil producers. In its monthly report released on November 13, the IEA called the move potentially the most significant for global oil markets since the restrictions were imposed, Bloomberg reports.

"While crude oil flows from Russia remain largely unchanged for now, the dismantling of Rosneft's and Lukoil's global value chains poses risks well beyond Russia's borders," the IEA warned. The agency maintained its production forecast for Russia at 9.3 million bpd for the current quarter and 2026 - until details emerge about the application of sanctions and possible schemes to circumvent them.

Despite the Russian authorities' statements about quick adaptation to the restrictions, the IEA noted that the volume of oil in tankers at sea is growing, while traditional buyers are assessing the risks. Russia is trying to compensate by creating new logistics chains: according to the agency, three newly established shipping firms exported about 1 million barrels of Russian oil and oil products per day in October. Nevertheless, the latest US sanctions "seem to have more teeth" than previous measures - as evidenced by the reduction in supplies to India, the IEA said.

On November 13, futures for benchmark Brent and North American WTI rose by almost 1% to $63.3 and $59 per barrel, respectively. Oil prices are correcting after a collapse of almost 4% on November 12. The sell-off was triggered by a change in OPEC's forecast - the cartel now forecasts an oversupply of oil in 2026 instead of the previously expected deficit.

Despite Western sanctions hampering supplies from Russia, the global oil market will face an even larger surplus in 2026 - up to 4.09 million bpd, or nearly 4% of global demand - amid rising production by OPEC+ countries and other producers, as well as slowing demand growth, the IEA forecasts.

"The balance in the global oil market is looking increasingly crooked as global oil supply rises rapidly while demand growth remains modest by historical standards," Reuters quoted the energy agency's November report as saying.

This article was AI-translated and verified by a human editor