By Will Horner
A move by the U.S. and its allies to release oil from their reserves should help counter the loss of Russia’s vast supplies after its invasion of Ukraine, and should help ease an energy crisis that has sent oil prices rising, the International Energy Agency said Wednesday.
The IEA, which earlier this month helped coordinate the collective stock releases, said the move would help prevent supplies of crude from falling significantly behind demand, which has rebounded at a fast clip as pandemic-related lockdowns in most of the world have eased.
Steady increases in monthly oil output from members of the Organization of the Petroleum Exporting Countries and their allies–which include Russia–as well as weaker demand in China, due to a resurgence of Covid-19 cases there, would also contribute to easing the long-brewing supply crunch made worse by the outbreak of war in Ukraine, the IEA said.
The IEA cut its demand forecast for the year by 260,000 barrels a day due to a lockdown in Shanghai that has shut off the city of 25 million people. The Paris-based agency now expects total demand for the year to stand at 99.4 million barrels a day.
The IEA also cut its forecasts for supply as oil releases from its members are expected to temper the loss of Russian crude oil, which has been left stranded by Western sanctions and moves by banks, shipping firms and Western oil companies to shun Russian cargoes.
The total oil supply for the year is forecast at 99.3 million barrels a day, around 200,000 barrels a day less than was expected a month ago, the IEA said.
Up to 3 million barrels a day of Russian oil could be lost to global markets by next month as the country’s oil companies–facing a dearth of customers and steep discounts for the oil they pump–shut in wells.
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