Replacing Russian Oil Supply Shortage Nearly Impossible—OPEC Tells EU

By Adedapo Adesanya

The Organisation of the Petroleum Exporting Countries (OPEC) has told the European Union (EU) that replacing Russian crude oil lost by an unprecedented possible ban from the region would be nearly impossible.

OPEC Secretary-General, Mr Mohammad Barkindo, said this in a speech at a high-level meeting between OPEC and the EU on Monday.

“We could potentially see the loss of more than 7 million barrels per day (bpd) of Russian oil and other liquids exports, resulting from current and future sanctions or other voluntary actions.

“Considering the current demand outlook, it would be nearly impossible to replace a loss in volumes of this magnitude,” the Secretary-General said.

The EU, like others before it, implored OPEC to increase crude oil output so as to tackle the continued supply constraints from Russia.

OPEC has thus far decided to stick to its agreed-upon oil production hikes of just 400,000 barrels per day on the grounds that the market issues are geopolitical and not fundamental—and therefore beyond OPEC’s control.

The EU has not yet banned imports of Russian oil and gas, but following recent issues revolving around abuse of human rights by the Russian army, this has triggered fresh calls that will make it difficult for President Vladimir Putin to fund the war.

Russia’s crude oil shipments rebounded in the first week of April to the highest level so far this year, with Russia’s Q1 2022 trade surplus hitting record levels as the prices of oil and gas continue to be elevated.

While it has been noted that large Asian buyers such as India and China continue to import oil and gas from Russia, so does the EU because it depends heavily on energy from the country.

Russia is expected to earn $9.6 billion more in April from oil and gas than it did in March despite bans from the United States and the United Kingdom.