Russian oil output will crater by 1.9 million barrels a day after fresh EU sanctions kick in, IEA says

• Russia's oil output will fall by 1.9 million barrels a day after EU sanctions kick in, the IEA said.
• By February 2023, the group expects Russia's oil production to drop to 9.5 million barrels a day.

In a Wednesday report, the International Energy Agency forecasted Russian oil output to fall by 1.9 barrels a day after new European Union sanctions begin.

The sanctions are set to begin in December via seaborne imports on Russian crude. Then they will expand to include products like diesel by February 2023.

"An additional 1 mb/d of products and 1.4 mb/d of crude will have to find new homes," the IEA said in its report. "An EU ban on maritime services may force further reallocations from third countries not agreeing to the proposed G7 price cap."

Once that happens next year, according to the energy watchdog, Russia's oil production will dip to 9.5 million barrels a day, which is 1.9 million barrels a day lower than February 2022.

In April of this year, the IEA had predicted that Russian oil output would sink by 3 million barrels a day within a month. That did not happen, however, as buyers like China and India kept Moscow's production and finances afloat.

Oil demand growth will stagnate in the fourth quarter of this year amid slowdowns across global economies, the report noted.

"For now, a deteriorating economic environment and recurring Covid lockdowns in China continue to weigh on market sentiment. Nevertheless, world oil demand is forecast to grow by 2 mb/d in 2022 and 2.1 mb/d next year," the IEA wrote.