IEA Sees U.S. Sanctions On Russia Disrupting Oil Flows

The new expansive U.S. sanctions on the Russian oil industry and exports could affect global oil flows, complicating trade logistics for producers using shadow fleets such as Russia, Iran, and Venezuela, the International Energy Agency (IEA) said on Wednesday.

Despite the prospect of declining supply from Russia and Iran, with the latest sanctions against Moscow from the outgoing U.S. Administration and expected stricter sanctions and sanction enforcement from the incoming Trump Administration, the global oil market is likely to remain in a surplus this year, due to supply continuing to outpace demand, the IEA said in its monthly Oil Market Report today.

The agency continues to expect just about 1 million barrels per day (bpd) in global oil demand growth this year compared to 2024.

The expected demand growth of 1.05 million bpd would be an acceleration from the estimated 940,000 bpd growth in 2024 “as the economic outlook improves marginally,” the IEA said.

Global supply, on the other hand, is set to grow by 1.8 million bpd in 2025 to 104.7 million bpd. Non-OPEC+ production is set to rise by 1.5 million bpd in 2025, led by the United States, Brazil, Guyana, Canada, and Argentina, according to the agency.

While the more expansive sanctions on Russia are set to further complicate oil trade logistics, exports on non-shadow tankers remain viable for Russian oil purchased below the price cap of $60 per barrel, the IEA noted.

Moreover, the latest U.S. sanctions on Iran’s shadow fleet from December “now cover vessels that transported an average of over 500 kb/d of Iranian crude in 2024, nearly one-third of the country’s crude exports,” the agency said.

“While it is too early to fully quantify the potential impact from these new measures, some operators have reportedly already started to pull back from Iranian and Russian oil,” it added.

Despite the potential of further supply declines from Russia and Iran, the market isn’t too concerned about a shortfall in global supply, with the expected jump in non-OPEC+ production, as well as the OPEC+ members looking to unwind extra voluntary production cuts.

“Those additions should cover both potential supply disruptions and expected demand growth,” the IEA said.

Source: Oilprice.com