From the macro point of view, oil markets are rattled by the war as Russia is the world’s second-largest crude oil producer after the US and the second-largest exporter after Saudi Arabia. But according to analysts, the unease is even more so due to OPEC+ and its inability to close the current supply gap.Crude markets are manifestly in short supply, with a deficit of around 1.5 million barrels per day (bpd) in January, as demand averaged 82.2 million bpd against supply of 80.7 million bpd. This spread is set to widen to more than 2 million bpd over summer.Analysts are attributing this shortage to ‘engineering’ by Saudi Arabia, which is not ready to fully open the taps, despite the fact that the kingdom is sitting on 2 million bpd of spare capacity, in coordination with other producers such as the UAE, which also has significant spare capacity. The gap obviously serves the producers as each barrel rings their cash chests with significant additional dollars.According to Rystad Energy research head Claudio Galimberti, the Ukraine war could put at risk disruption of up to 700,000 bpd of Russian crude exports. The Southern Druzhba pipeline flows through Ukraine, accounting for 250,000 bpd of throughput, while the port of Novorossiysk, (capable of 460,000 bpd), is just off the east of Crimea and south of the Sea of Azov, the epicenter of the war.The conflict could also trigger an increase in oil demand by raising the natural gas price further and thus driving the switching from gas to oil in the power generation sector, as is already being witnessed in some Asian countries, resulting in approximately 500,000 bpd of additional demand
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