The International Energy Agency stated Wednesday that three million barrels per daily (bpd), of Russian oil production are at risk starting in April after sanctions were imposed and buyers rejected the country’s exports.

According to the Paris-based oil firm, “The possibility of large-scale interruptions to Russian oil output is threatening create a worldwide oil supply shock.”

According to the IEA, “the consequences of a loss in Russian oil exports can’t be understated.”

Russia is third in oil production, behind Saudi Arabian and United States. Russia is however the biggest oil exporter and importer of products in the entire world. Europe is dependent on Russia to supply its energy needs.

January 2022Russia’s total oil and product production was 11.3 Million BPD. Around 8,000,000 bpd of that amount are exported.

According to the IEA, 2.5 million bpd exports could be at stake in the future. 1.25 million of those 1.5 million bpd are crude oil, while products account for the remaining 1 million.

The firm stated that these losses may get worse if bans and public censures accelerate.

It is possible that there will be peace which would reduce any disruptions on the oil markets.

Volodymyr Zelenskyy, President of Ukraine, stated Tuesday that an agreement was in the making.sound more realistic.” Sergey Lavrov, the Russian foreign minister, told BBC that there is “some chance of reaching a compromission.” If an agreement is reached, it’s not clear how the sanctions could be removed.

The sanctions imposed on Russia so far have been directed at wealthy people and financial institutions. Canada and the U.S. have already banned oil imports. The U.K., however, has announced that it will gradually end its purchase of this product. Other European nations, however, haven’t done the same because of their dependency on Russia.

Unfortunately, the energy supply continues to be exchanged because of deals made prior to Russia’s invasion of Ukraine.

However, the IEA reported that Russia is being boycotted by major oil firms, traders, shipping lines, and banks due to poor reputations and lack of information about possible future sanctions.

According to the firm, “New business is almost non-existent.”

Russia’s incursion in Ukraine caused oil prices to plummet due to concerns about supply disruptions on an already tight market.

In late February 2014, when Russia invaded Ukraine, crude oil soared to $100. From there, prices continued to rise. West Texas Intermediate crudeThe U.S. benchmark oil price, X, was traded at $130.50 last Wednesday. Brent crudeNearly reaching $140

The blistering rise on the way up was matched by a sharp fall since. WTI was trading at $96.62 per bar, Brent at $99.97.

WTI fell under $100Before both benchmarks close below 00:00 on Monday $100 on Tuesday.

The year-end oil price is up by around 30%, adding to the inflationary pressures in the entire economy. Last week, gas prices rose to their highest level ever. And given oil’s widespread use — in plastics and manufacturing, for example — higher prices have impacts across sectors and industries.

According to the IEA, “Surging commodity and international sanctions against Russia after its invasion of Ukraine will likely appreciably reduce global economic growth.”

This led to the company reducing its total oil demand forecast of 1.3 million barrels per day for the second, third, and fourth quarters this year. The IEA estimates that total 2022’s oil demand is now at 99.7 Million BPD, an increase of 2.1 million bpd over the 2021 levels.

The OPEC also expressed similar views in Tuesday’s monthly report.

“Looking ahead, challenges to the global economy — especially regarding the slowdown of economic growth, rising inflation and the ongoing geopolitical turmoil will impact oil demand in various regions,” the group said.