The International Energy Agency (IEA) has downgraded its outlook for Russian oil production, warning that sustained Ukrainian drone strikes on refineries and other energy infrastructure are cutting into both crude output and Russia's ability to refine and export fuel.
The IEA lowered its estimate for Russian oil production in 2026 by 125,000 barrels per day, to 8.7 million barrels a day. For 2027, the downgrade was even steeper, at 235,000 barrels per day, bringing the forecast down to 8.6 million barrels a day.
The revision confirms that repeated strikes on Russian energy facilities are beginning to leave a deeper mark on the country's production capacity.
Sharp Drop in August Output
According to data cited by Reuters, Russian crude production fell in August to 8.36 million barrels per day.
That marked a decline of about 200,000 barrels a day from July and roughly 940,000 barrels a day below the January peak, when production had reached 9.3 million barrels a day. On an annual basis, output was down 695,000 barrels a day.
A draft government forecast seen by Reuters showed Moscow expects oil production in 2026 to fall to its lowest level in 17 years.
Russia has not published official oil production figures since April 2023, a gap that has left the market increasingly reliant on estimates and trade data to gauge output.
Refineries Are the Bigger Problem
The most serious damage is not to crude extraction itself but to refining activity.
Ukrainian attacks have caused widespread disruption at Russian refineries, significantly curbing output of diesel and other refined products. The IEA estimates that the intensifying strikes have pushed Russian exports of oil products to a near-total halt.
Net diesel exports from Russia and Gulf countries were around 1.6 million barrels a day lower in August than in February, according to the agency.
Global Diesel Market Tightens
The development carries particular weight because the international diesel market is already under heavy strain.
Market participants expect global supplies to stay constrained through the winter, as the conflicts in Ukraine and the Middle East continue to reduce output of refined products. The combined diesel shortfall from Russia and the Middle East is estimated at around 4 million barrels a day, while refining margins have risen sharply.
Crude Exports Hold Up
Despite the pressure on refining, Russian crude exports have not collapsed.
Data from the analytics firm Kpler show exports running at roughly 5.5 million barrels a day in July and August, down from 6.4 million barrels a day in June. Even so, exports remained about 23% higher than in February.
The picture is therefore mixed. Russia continues to place substantial volumes of crude on international markets, but the toll on its refineries is increasingly limiting the higher-value products made from that oil.
Wider Pressure on the Oil Market
The strains in Russia add to an already stretched global oil market.
The IEA estimates that global supply will fall by about 5.7 million barrels a day in 2026, to 100.7 million barrels a day, with the largest losses coming from the Middle East and Russia.
In August, global inventories fell by roughly 95 million barrels, bringing total losses since February to 507 million barrels. The IEA is the Paris-based agency that advises major economies on energy policy and security.
The pressure has already fed through to prices, with Brent crude, the global benchmark for oil, trading above $100 a barrel and diesel prices running at especially high levels.
In the United States, the average diesel price reached $6 a gallon for the first time, while market executives warned that the margins which had previously held back further price rises have now narrowed considerably.
Months Ahead Seen as Critical
The key question now is whether Russia can quickly repair its facilities and keep crude exports at high levels.
If the attacks continue and production falls further, the risk is that the volumes Russia has available for export could shrink significantly. In a market where inventories are already declining and alternative supplies remain limited, any further loss of Russian output could add fresh pressure to prices.
