The huge list of sanctions imposed on Russia since it invaded Russia on Feb. 24 does not appear to have done much harm to the country led by Vladimir Putin. However, the worst is yet to come.
This is reported by Rystad Energy, an energy company based in Oslo, who explains that while Russia’s oil production is expected to remain high until the end of the summer, it is forecast to decline thereafter due to a recession in the national economy.
“The country has been actively increasing oil production in June and July after a significant drop of 1 million barrels per day in April, with the total volume in July almost recovering to the level observed before the start of the Russia-Ukraine conflict in late February. This strong increase was mainly driven by an increase in oil refining volumes, while crude oil exports declined after hitting record levels of over 5 million barrels per day in April and May. communiqué.
As such, Rystad presents a new estimate for average Russian oil production in 2022 of 9.6 million bpd, up 200,000 bpd from June forecasts.
However, “a looming European Union (EU) embargo on imports, combined with domestic economic problems, means Russia is facing major headwinds.”
“The Russian extractive sector has recovered, but this stability is short-term. Domestic consumption helped fill this gap during the peak season, but external demand has declined, creating problems later on. The next EU embargo remains an unknown factor, when and where it will have an impact is not yet clear, but it will accelerate the fall expected this fall,” said Daria Melnik, senior analyst at Rystad Energy.
