Oil markets are heading for an insanely difficult summer, with Russian production plunging under EU pressure

The world has not been able to reduce its thirst for Russian energy despite Russia's aggression.

Russia is now exporting more oil than before the war broke out, and it is making more money from foreign sales.

The EU's agreement to ban most Russian oil imports is going to change that. Russia's production is expected to fall by around 1 to 2 million barrels per day.

US gas prices have hit a record of $5 a gallon because of the surge in oil prices.

Analysts say the oil market is going to be hard this summer. Demand will stay high despite the drop in Russian production.

As India moves in, Russia's oil exports have increased.

India has stepped in to save Russian crude. Its purchases have gone up from zero to more than one million barrels per day because of the steep discounts on Russia's Urals oil.

According to the International Energy Agency, Russia exported 7.8 million barrels of oil a day over the past three months. In 2021, it was 7.5 million barrels a day.

Sales to Europe are going to fall. The EU agreed in May to cut Russian oil imports by up to 90 percent by the end of the year.

The most worrying thing for the market is European governments' plans to block ships from insuring Russian oil

If the UK goes ahead with a ban, it's probably the most important measure, he said. He said there weren't many alternatives to the London insurers.

Russia's facilities will cut production as exports plummet. Analysts think that output will fall by around 1 to 2 million barrels a day. The IEA suggests 3 million a day.

The production decline is likely to happen at the end of the year. Markets are forward looking and traders know they are coming.

The analyst at Kpler told Insider that the immediate effect is going to be extremely difficult.

Demand doesn't seem to be slowing down.

It will be difficult to fill the gap. The increase in production agreed to by the group of oil producing countries did not stop the price increase. An Iran nuclear deal doesn't look good.

Demand is not slowing down. Some drivers have been deterred by the high gas prices.

"It's more a case of demand erosion than demand destruction, that's what we think," said Suzanne Danforth, a research director at energy consultant Wood Mackenzie.

The demand for gasoline is down from last year.

Even higher prices are possible because of the combination of falling supply from Russia and strong demand. The price of crude is expected to rise this summer and stay there for a while. Goldman is predicting that oil will go up to $140 a barrel.

There are no easy choices. The only thing that lowers demand is a central-bank-created recession.

The best hope for bringing oil prices down is high interest rates.

As inflation flares and the Fed hikes rates, UBS explains why it sees a 'higher for longer' oil price, and lays out how investors can take advantage of it.