The pandemic could continue to impact global oil demand until 2024, while the decarbonization plans in major European economies could arise as a new threat to Russia’s oil industry, according to a draft document of Russia’s government seen by Reuters.

According to the estimates in the document about the prospects of Russia’s oil industry through 2035, global oil demand could continue to suffer through 2023 or 2024.

This year, global oil demand is expected to rise by 5.9 million barrels per day (bpd) compared to last year’s demand of 90.4 million bpd, as per OPEC’s estimates in its March Monthly Oil Market Report (MOMR). Before the OPEC+ ministerial meeting last week, the Joint Technical Committee (JTC) forecast in its latest base-case scenario demand growth of 5.6 million bpd for 2021, or 300,000 bpd lower than the estimate in the OPEC monthly report. 

Russia’s Deputy Prime Minister Alexander Novak also sees this year’s demand growth at around 5.6 million bpd.

There are still many uncertainties on the global oil market, especially in Europe, Russia’s top oil diplomat said at the OPEC+ meeting last week. Yet, there is currently a deficit of 2 million bpd on the market, Novak said.

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Apart from the fallout from the COVID pandemic, Russia’s oil industry could also be affected by the low-carbon push in many developed economies, including in Europe, which is a key export market for Russia’s oil, according to the document seen by Reuters.

The plans of many European capitals, including Rome and Paris, to restrict the circulation of diesel-fueled vehicles could start to affect demand for Russia’s crude and oil products as early as 2024, according to government estimates.

Earlier this week, Russia slashed its estimates for domestic crude oil, gas, and coal production for 2021 and 2022, according to the latest amendments in the government’s program for energy development. The estimates for the oil production for 2023 and 2024 remain unchanged, according to the document approved by the government.

By Tsvetana Paraskova for Oilprice.com

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