By Nathalie Voit

The International Energy Administration (IEA) warned on March 16 of drastic oil shortages starting in April as the possibility of nearly three million barrels per day (BPD) of Russian oil gets shut down amid ever-increasing sanctions on the Russian Federation by legislators, public companies, and the “self-sanctioning” of buyers alike.

“The prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock,” the Paris-based organization said in its monthly oil market report. “For now, we see the potential for a shut-in of 3 mb/d of Russian oil supply starting from April, but losses could increase should restrictions or public condemnation escalate.”

According to the IEA, Russia is the greatest exporter of crude worldwide, supplying about eight million BPD of crude and refined oil products. Europe, for example, gets about half of its oil from Moscow, according to the latest data from the U.S. Energy Information Administration.

The agency said refiners in Europe are struggling to source alternative supplies, but there have yet to be any meaningful signs of a potential increase in output. The only producers with spare oil capacity – Saudi Arabia and the UAE – have shown no willingness to tap into their petroleum reserves. The only other alternative named in the report is Iran, but the agency said any shipments from the country could be months off.

“Faced with what could turn into the biggest supply crisis in decades, global energy markets are at a crossroads,” the agency said. “The implications of a potential loss of Russian oil exports to global markets cannot be understated,” the IEA added.

In a separate post released on March 17, the agency said oil prices rebounded on Thursday after falling slightly over the past week amid hopes of a possible peace truce between Russia and Ukraine.  

As of Thursday, March 17 at 12:30 p.m. ET, global benchmark Brent Crude is up nearly 9% to trade at $106.68 a barrel after closing at $98.02 on Wednesday.

North American benchmark WTI Crude similarly surged around 7.75% to hit $102.40 per barrel on Thursday afternoon after closing the previous session at $95.04.

Both contracts are up after dipping below $100 this week after the IEA warned of likely supply shocks to the global commodities market in its report.