How does Russia cope with sanctions and reduce its output?

By Marta Koblanska, October 20, 2025,  12:00 Poland’s time, Photo: oil well extraction, Pixabay

Ukraine’s attacks on Russian refineries cut fuel supplies by 0.5 million barrels per day (mb/d) in September 2025. Meanwhile, Iraqi production exceeded targets, increasing by 0.51 mb/d, as reported in the International Energy Agency (IEA) oil market report issued on October 14, 2025.

Iraqi oil production in September seems to go on maximum capacity as the level for this OPEC country has been set, so far at 4,87 mb/d, leaving the spare at 0,27 mb/d. The supply from Iraq amounted to 4,6 mb/d, while the implied target was set at 4,09 mb/d in September 2025. Who is though in charge of the increase and potentially benefits, when in the same month two other core countries of OPEC lifted the output by 0,27 mb/d each?

Iraq is a country touched by war, which was fought in 2003. There was no one reason for this war, and oil issues at that time had not been placed as the most important, according to some recognized experts. Instead, they marked the case of the Kurdish people, a nation that was undergoing disgusting medical experiments in Iraq, and the US decided to stop it. British media in 2003 were reluctant to the decision, but Brits are the allies and historically also contributed to the countries’ structure in the Middle East. Russia was against the war; however, after a promise to regain its oil operations in the country silently did not interrupt/disturb the military action. Pope John Paul II, of course, did not bless the Iraqi war, but he did not condemn it either. People from the Arabic circle of culture were angry, sometimes asking whether Iraq is going to survive/exist further; nevertheless open to the positive testimony of the Kurdish people. The situation in Iraq after the Americans’ withdrawal was tough, as many attempted to establish rule there; however, now, as it is seen in the recent oil market report, the country managed to rebuild its oil production capacity and became again a substantial participant in the market.

Before the war in 2003, Russian Lukoil had secured a portion of the oil output capacity in Iraq. After the war, Poland was striving to get any contract in this country through Bechtel, a huge engineering corporation originating from Germany, established in the US, initially building railroad trucks. The oil from Iraq via reconstruction was seen at that time in Poland as a solution (or one of the potential solutions) to get oil from other than eastern destinations. Indeed, some Polish companies managed to sign contracts or preliminary contracts for the so-called, at this time, Iraq reconstruction. But whether Poland is getting oil directly from Iraq could be an open question. However, it is definitely gaining some from the US.

How does this contribute to the current situation and the recent oil market report issued by the International Energy Agency IEA? A part of the past deal between the US and Russia was to give the latter some oil production capacity in Iraq. The crude from this country is light, sweet, very efficient, and very, let’s say, desirable on the market. When the most? This is an open question for everybody who judges before listening to all sides. Now, according to the IEA’s recent oil market report ,,the drop in Russian middle distillate exports reverberated globally as regular buyers scrambled to secure alternative supplies, bidding up diesel and jet fuel cracks in the process. Light sweet crude refining margins hit two-year highs in Europe and 18-month highs on the US Gulf Coast and in Singapore in September”.

Light crude is particularly desired for jet fuel production, in line with the cracking process and the properties of the oil. And Russian crude oil output in September was indeed below the established target, but just by 0,16 mb/d/. The total supply from this country (officially reported ) amounted in September 2025 to 9,21 mb/d.

The IEA further states in the report that,, global crude runs will reach a seasonal low of 81.6 mb/d in October this year, nearly 4 mb/d below July’s record level”. Whether it substantially shortens Russia’s potential to cope with sanctions and restrictions on its oil or oil from other countries where it has secured capacities, is questionable. According to the IEA statement, ..in calm trading, benchmark crude prices were little changed in September, as a looming supply surplus dampened the impact of heightened Ukraine tensions and fresh sanctions against Russia and Iran”.

According to the IEA report, despite a global overall balance showing a shortage of just 4 million barrels per day (mb/d) in October—partially offset by increased refinery capacity—the oil product consumption market may be constrained. This is already evident from the sharp increase in stockpiling observed in September, which included a build of 102 million barrels of oil on water.

Oil’s share of the global energy balance, which increased during the 1970s and 1980s, has stabilized at approximately 31-32 percent. While forecasts predict a gradual decline in this share, oil will continue to be an important source of feedstock and energy for a long time, especially in the transportation sector.