Russian oil production will be hit hard starting next year as the European Union implements ban on seaborne exports of Russian crude oil, the International Energy Agency (IEA) said on Tuesday.
The move is hinged on depriving of Russia revenue, and according to a report by Reuters, will create uncertainty for oil markets and add to pressure on prices, including diesel.
“The approaching EU embargoes on Russian crude and oil product imports and a ban on maritime services will add further pressure on global oil balances, and, in particular, on already exceptionally tight diesel markets.
“A proposed oil price cap may help alleviate tensions, yet a myriad of uncertainties and logistical challenges remain … the range of uncertainty has never been so large,” said IEA.
The EU will ban Russian crude imports from December 5, 2022 and Russian oil products from February 5, 2022 depriving Russia of oil revenues and forcing one of the world’s top oil producers and exporters to seek alternative markets.
In addition, a G7 plan, intended as an add-on to the EU embargo, will allow shipping services providers to help to export Russian oil, but only at enforced low prices.