Russia oil production forecasts revised downward
The global energy market is continuing to grapple with the consequences of geopolitical conflicts. In its latest monthly report, the International Energy Agency (IEA) lowered its forecasts for Russia oil production this year and next, citing repeated Ukrainian drone attacks on Russian energy infrastructure that are weakening the country’s refining capacity.
The decline in Russian supply is only part of a broader and more complex picture. Renewed tensions in the Middle East, threatening the stability of the Strait of Hormuz, together with disruptions to global refining, are keeping the balance between global oil supply and demand under pressure, with implications for energy-importing regions, including Africa.
Drone strikes force the IEA to cut Russia oil production estimates
In its July Oil Market Report, the IEA said recent Ukrainian attacks on Russian energy infrastructure are expected to reduce the country’s oil production. Over recent months, Ukraine has intensified drone strikes targeting Russian energy facilities, including oil refineries, in an effort to weaken Moscow’s energy sector.
According to the agency, the continued attacks on refineries, storage facilities and transport infrastructure justify a downward revision of Russian oil output. As a result, the IEA reduced its supply estimates by 85,000 barrels per day for this year and 150,000 barrels per day for next year.
The agency now expects Russia, the world’s third-largest oil producer, to pump an average of 8.9 million barrels per day in 2026 and 8.8 million barrels per day in 2027, down from 9.2 million barrels per day in 2025. The 2026 and 2027 forecasts were revised downward by 85,000 barrels per day and 150,000 barrels per day, respectively.
The report also noted that Russia’s crude oil production increased by 120,000 barrels per day in June compared with May, reaching 8.86 million barrels per day, although this remained 900,000 barrels per day below its OPEC+ production target.
The IEA estimates that Russia’s total crude exports rose to 5.8 million barrels per day in June, an increase of 620,000 barrels per day from May. Exports of refined petroleum products, however, fell by 230,000 barrels per day to 1.91 million barrels per day.
This week, Russia also introduced a ban on diesel exports, adding to existing restrictions on gasoline and jet fuel exports in an effort to address fuel shortages in the domestic market.
Global oil supply remains below pre-conflict levels
The renewed hostilities between the United States and Iran could significantly alter the IEA’s outlook, which had previously projected a substantial oil market surplus next year. While global oil supply recovered in June following the reopening of the Strait of Hormuz, it remained below pre-conflict levels.
According to the July report, global oil supply rebounded by 4.1 million barrels per day in June to 98.8 million barrels per day, supported by the partial recovery of shipping through the Strait of Hormuz, which allowed Gulf producers to restore some output. Even so, global production remained approximately 9.4 million barrels per day below levels recorded before the conflict.
The IEA expects global oil supply to average 102.6 million barrels per day in 2026, assuming a rapid de-escalation of tensions. Without such a scenario, the impact on supply could be significantly greater. If shipping volumes through Hormuz continue to improve, the agency estimates that global oil supply could increase by 7.5 million barrels per day next year.
Global refining activity still under pressure
The IEA also reported that global refining throughput increased by 1.5 million barrels per day in June but remained 6 million barrels per day lower than a year earlier. Export-oriented refineries in the Middle East have yet to fully restart operations, Russian refining activity has been constrained by drone attacks, and Asian refineries continue to operate below normal capacity.
The agency expects global refining volumes to decline by 2.4 million barrels per day this year before recovering by 3.1 million barrels per day in 2027. This outlook remains closely tied to geopolitical developments and the pace at which global energy supply chains can stabilise.