IEA cuts Russia oil forecast as drone strikes erode output

The International Energy Agency on Thursday lowered its forecast for Russian oil production, projecting output will decline roughly 3% to 8.9 million barrels per day this year as Ukrainian drone strikes continue to degrade the country's energy infrastructure.

In its July Oil Market Report, the IEA cut its 2026 Russian crude forecast by 85,000 barrels per day and revised its 2027 outlook down by approximately 150,000 barrels per day, according to Reuters. The agency now expects Russia, the world's third-largest oil producer, to pump 8.8 million bpd in 2027, down from 9.2 million bpd in 2025.reuters+2

Recovery in June Masks Broader Decline

Russia's crude oil production rose by 120,000 barrels per day in June to reach 8.86 million bpd, a partial recovery from May's low of around 8.7 million bpd. But the month-on-month uptick has not altered the IEA's view that the trajectory remains firmly downward. Russia's total crude oil exports in June stood at 5.8 million bpd, up 620,000 bpd from May.globalbankingandfinance+1

The June rebound came after production had fallen for six consecutive months, according to The Moscow Times, as escalating Ukrainian drone campaigns hit processing facilities and upstream infrastructure across an increasingly wide geography.themoscowtimes

Long-Range Drones Expand the Target Map

The IEA noted that Ukraine has begun targeting more remote oil-producing regions with longer-range drones, broadening the scope of disruption beyond previously vulnerable refinery complexes. In its June report, the agency had already cut its annual Russian forecast by 200,000 bpd to 8.95 million bpd, citing "continued strikes on oil infrastructure". The July revision marks a further downgrade.reuters+3

Russia acknowledged for the first time in June that its oil output had declined this year, attributing the reduction to unscheduled maintenance. The IEA had previously forecast that drone strikes would suppress Russian refinery processing rates through at least mid-2026.mezha+1

The broader oil market context remains one of oversupply. The IEA's July report projects global oil demand will fall by 1 million barrels per day this year compared with 2025, the first annual contraction since 2020.tradingpedia