Oxford Institute of Energy Studies (OIES) has revised down the size of the expected disruptions in Russian oil production by 240,000 b/d to 630,000 b/d in 2022 and by 500,000 b/d to 1.5 mb/d in 2023, Trend reports.
OIES notes that the forecasts have been lowered due to the resilience of Russian production so far and ability of Russian producers to divert large volumes of crude from Europe to other markets.
“In August, Russian crude production was estimated around 10.6 mb/d, 400,000 b/d below pre-invasion levels. In our reference case Russian output starts to decline gradually from August-onwards and losses intensify towards year-end to surpass 1 mb/d before peaking at 1.6 mb/d in February 2023 when EU sanctions are in full effect. On the lower bound, Russian disruptions are expected to reach near the previous high of 900,000 b/d by year-end and peak at 1.2 mb/d in February 2023, to average 1 mb/d for the year,” reads the OIES report.
Considering the confirmation by G7 to review and finalize a price cap measure on Russia oil, this month the Institute also considers a high case scenario under which a price cap is hypothetically imposed in early-December and Russia responds by cutting its production, withholding crude exports from countries joining the cap.
“As of August 2022, total crude exports amounted close to 4.5 mb/d and for scenario purposes we assume that Russia hypothetically cuts production by 3 mb/d compared to pre-invasion levels close to 8.1 mb/d. Both high/low Russian disruption scenarios are included in our balance of risks for this month.”