By Noah Browning

LONDON (Reuters – Even with lower oil output due to sanctions-hit Russia on Thursday, the International Energy Agency said that the world would not run out of oil despite its reduced supply forecasts from Russia for the second month in a row.

The IEA predicts 1 million barrels per hour (bpd). This is compared with 1.5 million bpd last month, and 3 million in March. It’s because some European refiners have opted to avoid Russian crude oil in anticipation of a ban on future imports.

Paris-based IEA said that production growth elsewhere will offset slowing demand growth from China, and that a huge deficit won’t happen.

The IEA’s monthly oil report stated, “Over the long-term, steadily rising volumes coming from the U.S. OPEC+ and Middle East OPEC+ are expected to fend of an acute supply shortage amid a worsening Russian supplier disruption.”

According to the Paris-based agency, the potential economic consequences of additional sanctions against Russia on energy could be minimal.

GRAPHIC: Global oil supply https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgknqepb/globaloilsupplyMay.PNG

The IEA stated that rising pump prices and slower economic growth will likely significantly reduce demand recovery over the rest of the year, and well into the future. It also noted that China’s curbs on COVID-19 were causing an extended economic slowdown.

GRAPHIC: China total oil demand revisions https://fingfx.thomsonreuters.com/gfx/mkt/zdvxogmjzpx/ChinaTotalOilDemandRevisions.PNG

A combination of slower exports and declining domestic demand meant that around one million barrels per hour (bpd), Russian oil, were closed down in November. That’s about half a milliillion bpd lower than forecast by the agency.

According to the IEA, that number will rise to 1.6million bpd in mai and 2 million in June. It could also reach nearly 3,000,000 by July if there are sanctions to prevent further expanding or purchasing.

After the IEA halted a U.S.-led emergency release in November, the IEA decided to tap 240 million more oil from its second tapping this year. [L2N2WY2DE]

The IEA reported that Russian exports increased by 620,000 bpd to 8.1million bpd in April, compared to the previous month. This is due to the fact that supply from America and Europe was rerouted to India, which is primarily for Russian imports.

GRAPHIC: Russian exports https://fingfx.thomsonreuters.com/gfx/mkt/movanoebapa/Russiancrudeoilexports.PNG

The European Union remains the largest market for Russian oil exports as it attempts to ban Russian oil. This is just 535,000 bpd less than the beginning of the year, according to the IEA.

The Russian bloc accounts now for 43% of oil exports to the EU, a drop from 50% in 2008.

(This article corrects the headline and the first and second paragraphs in order to clarify that in April, the IEA reported that the threat of a large oil market shortage had declined.