How the shunning of Russian oil leaves a hole in the market - CNA

5. What could plug the hole?

The International Energy Agency, which represents key industrialised countries, announced plans on Mar 1 to deploy 60 million barrels from stockpiles around the world. Half of that amount will come from the US Strategic Petroleum Reserve, with the rest from members in Europe and Asia, according to details released by the IEA.

The planned release equates to about 17 days’ worth of frozen Russian crude shipments and additional volumes may be made available. IEA member countries hold nearly 1.5 billion barrels of government-controlled oil stockpiles. 

6. Could more oil come from other sources?

There are several possible sources of additional supply. There are hopes that Iran could inject oil into the market, should world powers succeed in their efforts to secure a new agreement with the country limiting its nuclear program in exchange for the US lifting sanctions that have restricted its oil exports.

So far, the Organization of the Petroleum Exporting Countries and its allies have declined to accelerate their output. At meeting in early March, the group stuck with the modest 400,000 barrel-a-day production increase it had earlier scheduled for April.

There is also spare capacity in the US, where producers have been limiting growth in recent years under pressure from investors. The US has also been in talks with Venezuela, signaling a possible major shift in the US approach to the socialist government.  

7. What are the implications for Russia’s energy industry?

US President Joe Biden’s administration has said it’s seeking to degrade Russia’s status as a leading producer of oil and natural gas by restricting exports of technology related to the energy sector.

Some of the world’s largest oil companies, including Exxon Mobil, BP and Shell, have pledged to exit Russia, reducing capital available for investments. Paris-based TotalEnergies SE said it wouldn’t dump operations in Russia for now but will no longer provide capital for new projects there.

It owns roughly a fifth of gas producer Novatek PJSC as well as a large interest in the Yamal LNG project, Russia’s biggest producer of liquefied natural gas.

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2022-03-08 07:48:47Z
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