Russian Oil Output, East Med Gas to Europe, and Iraq’s Energy Shortages

Among the top risks in 2023: Declining Russian revenues and energy shortages in Iraq

MAIN TAKEAWAYS

• “Oil laundering” is the name of the game. As expected, European countries that imposed sanctions on Russian oil are importing refined Russian crude through other countries.

• The decline in Russian oil and gas revenues is one of the top risks in the energy markets in 2023 and 2024. But the drop has nothing to do with the G7-led price cap.

• As revenues dwindle due to lower prices, Moscow will have to lower taxes to maintain production and exports.

• The impact of declining Russian revenues on OPEC+'s decision to cut production is unclear for now.

• The idea that Germany can import gas from Iraq is a pipe dream. Iraq needs to take more action to reduce gas flaring, develop its non-associated gas fields, and upgrade its midstream sector.

• The role of Egypt and Israel in delivering gas to European markets increased in 2022 and is expected to grow further in the coming years.  Europe, in its turn, needs to increase investments in the Eastern Mediterranean region.

From Russia with Love: ‘Laundering’ Russian Oil (Bearish)