Russian Oil Output To Drop 18% By 2023 Due To EU Ban

According to the US Energy Information Administration (EIA), Russian oil output could drop by 18% by the end of next year. The prediction comes in response to an EU embargo on all Russian crude shipments by sea, Zahra Tayeb reported for Business Insider.

Photo Insert: A Gazprom oil barrel

If output falls by that much, 18 years of improvements in oil production will be erased. The EIA warned in its monthly report on Tuesday, June 7, that Russia's oil output may drop by about a fifth by the end of next year if Europe enforces a proposed import restriction in retribution for the war in Ukraine.

As part of its increased pressure on Russia over the invasion of Ukraine, the EU plans to restrict all Russian seaborne oil imports.

If the EU prohibition on Russian seaborne trade and petroleum product imports is implemented in six months and eight months, the EIA forecasts a drop in Russian oil production of roughly 18% from 11.3 million barrels per day to 9.3 million barrels per day by the end of next year.

"The possibility that these sanctions or other potential future sanctions reduce Russia's oil production by more than expected creates upward risks for crude oil prices during the forecast period," the EIA said.

Russia exports approximately 7 million barrels of crude per day, with over half of that amount arriving in the EU via pipelines and oil tankers. With the exception of a pandemic-related dip in Russian oil output in 2020, the expected decline would effectively wipe out 18 years of production gains.

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