By Robert Harvey and Alex Lawler
LONDON (Reuters) – Russia’s oil exports could be sustained if it finds workarounds to the latest U.S. sanctions package, the International Energy Agency (IEA) said on Thursday, as it forecast that growth in global oil supply would outpace demand this year.
Russian crude production rose by around 100,000 barrels per day (bpd) last month to 9.2 million bpd, the IEA said in a monthly report, even after its energy sector was struck with far-reaching sanctions on January 10.
“Time and again, oil markets have shown remarkable resilience and adaptability in the face of major challenges – and this time is unlikely to be different,” the IEA said.
“Workarounds to sustain Russian export volumes may well appear in the coming weeks,” it said.
Last month, the Paris-based adviser to industrialised countries said Washington’s sanctions could significantly disrupt Russian oil supply chains, but nonetheless held off from altering its forecasts until the impact was clearer.
The U.S. sanctions announcement and prospect of supply cuts helped oil prices make a strong start to 2025, with global benchmark Brent crude settling on January 15 above $82 a barrel, the highest since August 2024.
Still, oil’s gains were all but reversed by the end of the month on growing concerns over the global economy and the potential impact from emerging trade wars, the IEA said.
The IEA has become more cautious about the impact on Russian supply since March 2022, soon after the start of the war in Ukraine and the first sanctions on Moscow.
Then, it predicted 3 million bpd of Russian supplies might not find their way to market due to Western sanctions and buyer reluctance. Russian supply never fell by that much, and the agency revised its predictions.
Three years into the war, Russia has withstood wave after wave of sanctions as India and China have increased purchases of its discounted oil.
One of its responses to January’s sanctions has been to seek out smaller vessels to supplement its so-called shadow fleet, Reuters reported.
SUPPLY RISES
In Thursday’s report the IEA also made a minor upward revision to its oil demand forecasts, pegging 2025 global demand growth at 1.1 million bpd, up from a previous view of 1.05 million bpd. It continues to see supply growing faster.
Oil maintained an earlier decline after the IEA report was released on the prospect of a peace deal between Russia and Ukraine, with Brent trading near $74.
Global supply is on track to increase by 1.6 million bpd in 2025, led by the Americas, the IEA said, even in the absence of the Organization of the Petroleum Exporting Countries plus Russia and other allies, known as OPEC+, unwinding output cuts.
OPEC+ has implemented a series of cuts since 2022 to support the market and repeatedly delayed reviving output due to weak demand and rising supply outside the group. Its current plan calls for its latest round of cuts to be gradually eased from April.
Global oil demand growth remains driven by China, the IEA said, and is dependent on the country’s petrochemical sector as its demand for conventional transport fuels slows.
China’s use of gasoline, jet/kerosene and gasoil declined marginally in 2024, the IEA said, and combined consumption of almost 8.1 million bpd was only narrowly above 2019 levels.
“This strongly suggests that fuel use in the country has already reached a plateau and may even have passed its peak,” the IEA said.
(Reporting by Robert Harvey and Alex Lawler in London; Editing by David Goodman and Aidan Lewis)
