War in Ukraine could wipe out 1 million bpd of global oil demand

Russia’s invasion of Ukraine could lead to one million barrels per day (bpd) of oil demand being removed from the global energy market, Rystad Energy warned in a research note on Thursday.

“Oil demand in both Ukraine and Russia is set to plunge if an end to the conflict does not materialise quickly. Ukraine is likely to see the largest drop in relative terms, potentially losing more than 50 percent of demand so long as the war persists, with long-term implications inevitable due to infrastructure damage and the speed of getting facilities back online once the conflict has come to an end,” the research company said in a statement.

With the Ukraine-Russia crisis continuing to weigh on markets, oil prices have surged in the past week after the Opec+ alliance stuck with its production plans for April.

According to Rystad Energy, the human and material costs of the Ukraine conflict have been catastrophic just seven days into the military operation.

“Russia has so far shown no signs of backing down, and prospects of a breakthrough in negotiations appear slim. As a result, investors and markets are scrambling to assess the ramifications of the worsening crisis as the West slaps even more stringent sanctions on Russia, while institutions and companies distance themselves from Moscow,” it said in the note.