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J.P. Morgan on Thursday forecast Russia would be able to maintain its oil output at pre-Ukraine conflict levels due to steady demand from China and India but said it might struggle to reroute some of its oil product exports away from Europe.
“We believe Russia will be able to maintain its oil production at pre-war levels of 10.8 mbd (million barrels a day) but will have difficulties getting back to peak pre-COVID volumes of 11.3 mbd,” the bank said.
J.P. Morgan expects Indian and Chinese demand collectively to increase by 1 million bpd this year.
Russia has so far managed to reroute oil exports from Europe to India, China and Turkey, which snapped up cheap barrels despite the Group of Seven’s $60 price cap on Russian crude.
China’s seaborne imports of Russian oil are set to hit a record in March along with robust Indian demand.
The International Energy Agency said the world’s second biggest oil producer saw revenues from oil and gas exports drop by nearly 40% in January.
J.P. Morgan said Russia’s oil product exports were expected to drop by about 300,000 bpd to “lows last seen in May 2022” as it struggles to reroute refined products exports.
The bank also said Moscow could face more competition from refiners in the Middle East coming online in the second half of the year.
Reuters has previously reported that Russia plans to cut oil exports from its western ports by up to 25% in March versus February in a bid to lift prices for its oil.
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