In its monthly report, the International Energy Agency (IEA) lowered its forecast for global oil demand in 2022. This is attributed to the faltering growth in rich countries and the possible impact of Covid-19 restrictions in China.

The IEA expects worldwide oil demand to grow by 2M barrels per day this year. Its previous estimate was 2.1M barrels per day. The agency further added that a deteriorating economic environment and frequent Covid lockdowns in China continue to affect market sentiment.

It also asserted that more oil is hitting the market. Total output rose to 101.3M barrels per day in August, up by more than 5M barrels per day annually. While there was a gain in the production capacity of Libya, Saudi Arabia, and the UAE, the output was low in Nigeria and Kazakhstan.

In Russia, production remained resilient despite the impact of Western sanctions following the outbreak of the Ukraine war. Notably, oil and crude shipments to China, India, and Turkey helped balance a drop in exports to the US, Europe, Japan, and Korea.

However, the agency predicted that an upcoming European Union (EU) ban on Russian imports later this year will likely cause the country’s oil production to drop by 1.9M barrels per day by February 2023.