The International Energy Agency has lowered its forecasts for Russia oil production after repeated Ukrainian drone strikes on energy infrastructure. At the same time, uncertainty over the Strait of Hormuz continues to weigh on global oil supply.
Russia oil production under pressure as refinery attacks reshape global supply outlook
The global energy market continues to face the consequences of geopolitical conflicts. In its latest July Oil Market Report, the International Energy Agency (IEA) revised down its forecasts for Russia oil production this year and next, citing repeated Ukrainian drone attacks on the country’s energy infrastructure that are undermining Moscow’s refining capacity.
The decline in Russian supply is only one element of a much broader picture. Renewed tensions in the Middle East continue to threaten stability in the Strait of Hormuz, while disruptions to refining activity are keeping the balance between global oil supply and demand increasingly fragile.
Russia oil production forecast revised lower
The International Energy Agency‘s July report projects lower Russia oil production following recent Ukrainian drone attacks on Russian energy infrastructure. Over recent months, Ukraine has intensified strikes targeting oil refineries and other strategic energy facilities in an effort to weaken Russia’s energy sector.
According to the IEA, the continued attacks on refineries, storage facilities and transport infrastructure justify a downward revision of Russian oil supply forecasts. The agency reduced its production estimates by 85,000 barrels per day for this year and by 150,000 barrels per day for next year.
Russia, the world’s third-largest oil producer, is now expected to produce an average of 8.9 million barrels per day in 2026 and 8.8 million barrels per day in 2027, down from 9.2 million barrels per day recorded in 2025.
The IEA also reported that Russian crude oil production increased by 120,000 barrels per day in June compared with May, reaching 8.86 million barrels per day. However, output remained around 900,000 barrels per day below Russia’s production target under the OPEC+ agreement.
Russian crude exports were estimated at 5.8 million barrels per day in June, up by 620,000 barrels per day from the previous month. Exports of refined petroleum products, however, declined by 230,000 barrels per day to 1.91 million barrels per day.
Meanwhile, Russia introduced a temporary ban on diesel exports this week, adding to existing restrictions on gasoline and jet fuel exports, in an effort to address fuel shortages in the domestic market.
Strait of Hormuz remains a key source of uncertainty
The renewed escalation between the United States and Iran could significantly alter the International Energy Agency’s outlook, which had previously projected a sizeable oil market surplus next year. Although the reopening of the Strait of Hormuz supported a partial recovery in global supply during June, production remains well below pre-conflict levels.
According to the July Oil Market Report, global oil supply rebounded by 4.1 million barrels per day in June, reaching 98.8 million barrels per day, supported by the partial resumption of shipping through the Strait of Hormuz. This allowed Gulf producers to begin restoring part of their output.
Despite this recovery, global production remained approximately 9.4 million barrels per day below levels recorded before the conflict began.
The IEA expects global oil supply to average 102.6 million barrels per day in 2026, assuming a rapid de-escalation of tensions. Should geopolitical conditions deteriorate further, supply losses could be substantially greater. Conversely, if maritime traffic through the Strait of Hormuz continues to improve, global oil supply could increase by 7.5 million barrels per day next year.
Global refining activity remains constrained
The agency also reported that global refinery throughput increased by 1.5 million barrels per day in June but remained 6 million barrels per day below the level recorded a year earlier.
Refining activity continues to be constrained by several factors. Export-oriented refineries in the Middle East have yet to fully resume operations, Russian processing volumes remain affected by repeated drone attacks, and Asian refineries are still operating below normal capacity.
The IEA forecasts that global refining throughput will decline by 2.4 million barrels per day this year before recovering by 3.1 million barrels per day in 2027.
