On Thursday, CNN Business reported that a major energy watchdog, the International Energy Agency, is now forecasting that the world economy will absorb the loss of Russian oil without significant disruptions — a major turnaround from their previous forecasts, and a bad sign for Vladimir Putin's hope that he can wait out western embargoes against his regime.
"The IEA, after warning on March 16 that 3 million barrels per day could be shut in from April, lowered that figure for a second time as it noted only 1 million barrels per day had gone offline. Production ramping up elsewhere and slower demand growth due to China's lockdowns will forestall a big deficit, the Paris-based IEA said," said the report. "'Over time, steadily rising volumes from Middle East OPEC+ and the US along with a slowdown in demand growth is expected to fend off an acute supply deficit amid a worsening Russian supply disruption,' the IEA said in its monthly oil report."
"The assessment suggests the economic impact from further sanctions on Russian energy mulled by the European Union could be limited," continued the report. "'Soaring pump prices and slowing economic growth are expected to significantly curb the demand recovery through the remainder of the year and into 2023,' the IEA said, adding that curbs aimed at containing Covid-19 in China were driving an extended economic slowdown there."
The European Union has for years relied on Russian oil and gas, but in retaliation for Putin's invasion of Ukraine, several countries are considering a ban similar to the one enacted by the United States, which was never a significant consumer of Russian energy to begin with.
However, one key obstacle to a total EU ban on Russian energy is Hungary, which is demanding that the embargo only apply to oil delivered by tanker ships and exempt the pipelines that deliver oil directly.
Internal estimates from the Kremlin suggest officials there are fearful that the sanctions already in place are devastating the Russian economy.
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