The International Energy Agency has cut its forecast for Russia’s oil production for the second consecutive month, citing the growing impact of Ukrainian drone attacks on the country’s energy infrastructure and a sustained decline in crude output.
The downgrade adds another layer of uncertainty to global oil supply at a time when disruptions to major producing and transit regions have already heightened concerns about market tightness.
In its monthly oil market report on Friday, the Paris-based agency lowered its forecast for Russian crude production by 125,000 barrels per day to 8.7 million bpd in 2026. It also cut its 2027 forecast by 235,000 bpd to an average of 8.6 million bpd.
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Russia is the world’s third-largest oil producer, making any sustained reduction in its output significant for global supply balances. The country has also remained one of the largest exporters of crude and refined petroleum products despite years of Western sanctions and efforts to restrict its energy revenues following its invasion of Ukraine.
The latest figures suggest the conflict is increasingly affecting Russia’s ability to maintain production capacity rather than simply disrupting individual shipments or refinery operations.
Russia’s crude production fell by 200,000 bpd in August from July to 8.36 million bpd, according to the IEA. That was 940,000 bpd below the country’s January peak of 9.3 million bpd and 695,000 bpd below production a year earlier.
The scale of the decline is particularly notable because Russia has historically been able to redirect oil exports and adjust its production in response to sanctions and market conditions. Repeated attacks on refineries and other energy facilities, however, introduce a different constraint: physical damage to infrastructure can take longer to repair and may limit the ability to process, store and transport crude even when oil itself remains available.
Russia’s Production Outlook Deteriorates
The IEA’s latest downgrade follows a government draft forecast seen by Reuters last week showing that Russia had also reduced its own outlook for oil production this year to a 17-year low. The government forecast also lowered expectations for fuel exports in 2026 and 2027, underscoring the broader impact of the conflict on Russia’s petroleum industry.
The production data are difficult to verify independently because Russia stopped publishing official oil-output figures in April 2023, slightly more than a year after the start of the war in Ukraine. The IEA therefore relies on a combination of available industry and market information to estimate Russian production. The resulting differences between agencies highlight the uncertainty surrounding the country’s actual output.
The Organization of the Petroleum Exporting Countries, for example, estimated on Thursday that Russian oil production declined by 160,000 bpd in August from July to 8.718 million bpd. The IEA’s estimate of 8.36 million bpd is therefore substantially lower than OPEC’s figure, although both point in the same direction: Russian production weakened in August.
The divergence also demonstrates why Russia’s production trajectory has become increasingly difficult for oil traders and policymakers to assess. With Moscow no longer regularly publishing its own production data, outside estimates have become critical to understanding the actual supply impact of the conflict.
More importantly, the direction of travel is increasingly clear. The IEA has now reduced its forecasts for both 2026 and 2027, indicating that it expects at least some of the damage and operational disruption to persist rather than disappear quickly.
The development is expected to weigh heavily on global oil markets. This is because a temporary refinery outage can reduce product supply for weeks or months without necessarily affecting underlying crude production. Repeated attacks that damage production-related infrastructure can have a longer-lasting effect by reducing the amount of oil Russia can bring to market.
The pressure comes at a difficult time. Lower production for Moscow potentially means lower export volumes and government revenues, while maintaining output requires operating and repairing infrastructure under wartime conditions. For global markets, any sustained reduction in Russian supply removes barrels from an already interconnected system in which spare production capacity and the availability of alternative exporters can determine how sharply prices respond to disruptions.
Energy analysts believe that the weight of impact will ultimately depend on how much of Russia’s lost output is permanent, how quickly damaged facilities can be restored and whether other producers can compensate for the shortfall. The IEA’s revisions nevertheless indicate that the disruption is becoming significant enough to alter expectations for Russia’s production several years ahead.
The contrast between the IEA and OPEC estimates also means traders will continue to watch physical supply indicators closely. If Russia’s actual output proves closer to the IEA estimate, the market could be materially tighter than headline production figures based on higher estimates suggest.
However, the latest downgrade is seen as bolstering a broader shift in the oil market: geopolitical conflict is increasingly affecting physical production capacity, not simply the risk premium embedded in crude prices. Russia remains a major source of global supply, but its declining production and uncertain outlook mean the market has less certainty about how many barrels Moscow will be able to deliver in the years ahead.