LONDON: The latest round of US sanctions against Russian oil announced last Friday could significantly disrupt the country’s oil supply chains, the International Energy Agency said in a monthly report on Wednesday.
The IEA’s oil market outlook, which advises industrialised countries, still suggests that the global market will be in surplus this year due to supply growth exceeding subdued expansion in demand.
New US sanctions on Iran and Russia cover entities that handled over a third of Russian and Iranian crude exports in 2024, the IEA said.
“We maintain our supply forecasts for both countries until the full impact of sanctions becomes more apparent, but the new measures could result in a tightening of crude and product balances,” it said.
Washington’s latest sanctions package listed over 160 tankers, which moved around 22% of Russian seaborne oil exports in 2024 according to the IEA. Previous vessel designations had been “highly effective, reducing the activity of designated tankers by 90%”, the agency said.
The IEA said that tighter sanctions, as well as a cold weather snap in the northern hemisphere, had propelled crude prices above $80 a barrel in early January.
However, the IEA said price gains could be tempered by strong non-OPEC+ supply growth, the OPEC+ coalition looking to unwind cuts, and the ability to draw on stocks quickly if needed.
The IEA now expects global oil supply growth to reach 1.8 million barrels per day in 2025, with non-OPEC+ production accounting for the majority at 1.5 million bpd.
IEA expects comfortably supplied oil market in 2025 despite demand hike
That is faster than its forecast for oil demand growth this year of 1.05 million bpd, after a slight downward adjustment from 1.1 million bpd in the previous month’s report.
Brent futures edged lower on Wednesday, trading at $79.71 a barrel at 0927 GMT, down 21 cents from previous close.
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