Global oil markets are under growing pressure as U.S. sanctions on Russia and Iran tighten, while extreme weather across the Northern Hemisphere has pushed Brent crude futures to a four-month high of $81 per barrel in mid-January, according to the latest Oil Market Report from the International Energy Agency (IEA).
Last week, the Biden administration expanded sanctions to target over 160 tankers involved in transporting oil for Russia, Iran, and Venezuela. The sanctions also include restrictions on ship insurance providers. The measures primarily focus on two major Russian oil companies, Gazprom Neft and Surgutneftegaz. However, Russian oil purchased below price caps can still be transported on non-shadow tankers.
The IEA report notes that the new U.S. Treasury sanctions are having a significant impact on Iran’s shipping sector, affecting vessels that transported around 500,000 barrels per day (kb/d) of Iranian crude in 2024—about one-third of the country’s total crude exports. The IEA also mentions that some operators have already started pulling back from Russian and Iranian oil trades.
In addition to sanctions, extreme weather is putting further strain on the market. The IEA highlights severe weather across North America, which is threatening oil production. The report points to last winter’s Arctic cold snap, which caused U.S. and Canadian oil production to drop by more than 1.8 million barrels per day (mb/d). While a smaller decline is expected this year, Cushing crude inventories are at their lowest levels in a decade.
Despite these challenges, the IEA maintains an optimistic outlook for oil supply stability. The agency forecasts that non-OPEC+ producers will add 1.5 mb/d of supply in both 2024 and 2025, led by the U.S., Brazil, Guyana, Canada, and Argentina. The IEA also notes that OPEC+ members are ready to increase production if necessary by unwinding voluntary cuts.
According to the IEA’s projections, global oil demand is expected to reach 104.7 mb/d in 2025, driven by growth of 940,000 barrels per day (kb/d) in 2024 and 1.05 mb/d in 2025.
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