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Citi analyst says there’ll be “much more than enough oil” despite Russia cuts

There’s likely to be “much more than enough oil” despite fears to the contrary, that’s the view of analysts at Citigroup. It is, on the face of it, a bold and bullish comment from the investment bank – but it comes with caveat and, frankly, the reasoning behind this analysis isn’t exactly cheery. Indeed, it’s a gloomy double negative that allows for a merely superficial positive. As war, soaring inflation and latest Chinese covid lockdowns slam the brakes on global growth expectations the knock-on will be a slowdown in demand growth for crude, and, having run some numbers the analysts at Citi basically reckon the slowdown will outpace the fuel shortage. “Even as Russian production slides and OPEC+ actually reduces total flows to markets, a slowdown in global growth is reducing oil demand growth and the IEA release of 220mln barrels of oil between now and October point to market weakness and inventory builds ahead,” analyst Edward Morse said in a note. “Citi’s view is that expectations of a 2-3mln b/d drop in Russian production are exaggerated. “Of 1.9-m b/d of European seaborne exports of crude oil, around 900-k b/d is being pushed to other markets such as India or will likely stay in some European markets with limited access to non-Russian oil.” Morse added: “Without a deeper Russian cut, which is possible, the numbers add up to much more than enough oil.”