International Energy Agency Revises Russia's Oil Production Outlook

The International Energy Agency (IEA) has announced that its predictions for Russia's oil production in 2026 and 2027 have been reduced, primarily due to intensified drone strikes from Ukraine on the country's energy infrastructure. In its monthly oil market report published on Friday, the IEA stated that Russia's production, which averaged 9.2 million barrels per day in 2025, has been impacted negatively by sustained attacks on storage, refining, and transport assets.

In light of these developments, the agency has cut its forecasts for Russian oil supply. For 2023, it downgraded the output estimate by 85,000 barrels per day, bringing the average to 8.8 million barrels per day. The outlook for 2024 has seen a similar reduction, with a cut of 150,000 barrels per day to an expected 8.8 million barrels per day.

Looking ahead to 2026, the IEA has revised its oil supply forecast downward by 85,000 barrels per day to 8.9 million barrels. The projection for 2027 has been adjusted more dramatically, with a reduction of 150,000 barrels per day to the same 8.8 million barrels per day estimate.

Despite these cuts, the IEA's report indicates that Russia's crude oil output rose to 8.86 million barrels per day in June, following a previous month’s output of 8.74 million barrels per day. However, this production level was still 910,000 barrels per day below Russia's implied quota under the OPEC+ agreement, which set a target of 9.76 million barrels.

Amid these circumstances, Russia has reportedly ramped up its crude oil exports in recent months. This increase is largely due to domestic fuel shortages sparked by the Ukrainian offensive against the country's refineries. The IEA points out that these attacks have led to a limited storage capacity within Russia, prompting a significant rise in exports.

Ukraine has broadened its military actions to include targeting fuel supply routes and shipping vessels, aiming to disrupt essential supplies as part of its ongoing campaign. Russian President Vladimir Putin recently acknowledged the struggles regarding fuel supply. After regional officials attempted to minimise these issues, he stated, "We are considering a full ban on exports of diesel fuels."

The full ban on diesel exports was implemented earlier this week as the Ukrainian campaign to weaken Russia's fuel supply continues. This situation highlights the ongoing complexities in the global oil market and the impact of geopolitical tensions on energy production and distribution.