The International Energy Agency cut its world oil demand forecast for 2022 today, warning that sanctions against Russia over its invasion of Ukraine could spark a global supply "shock".
"Faced with what could turn into the biggest supply crisis in decades, global energy markets are at a crossroads," the IEA said in a monthly report.
"While it is still too early to know how events will unfold, the crisis may result in lasting changes to energy markets," said the Paris-based agency, which advises developed countries.
Russia, the world's biggest exporter of oil, has been hit with a slew of international sanctions over the war in Ukraine, which sent oil prices soaring.
While the measures exclude the energy market, the IEA said major oil companies, trading houses, shipping firms and banks have "backed away from doing business with the country".
The US and Britain have announced their own bans on Russian oil imports.
"The implications of a potential loss of Russian oil exports to global markets cannot be understated," the IEA said.
"The prospect of large-scale disruptions in Russian production due to wide-ranging sanctions as well as decisions by companies to shun exports after Moscow's invasion of Ukraine is threatening to create a global oil supply shock," it said.
The agency lowered its forecast for growth in oil demand by nearly one million barrels per day and now expects world oil demand to reach 99.7 million barrels per day this year.
The IEA also said that three million barrels per day (bpd) of Russian oil and products may not find their way to market beginning in April in the wake of its invasion of Ukraine, as sanctions bite and buyers hold off.
"We see a reduction in total exports of 2.5 million bpd, of which crude accounts for 1.5 million bpd and products 1 million bpd," the IEA said in its monthly oil report.
Additionally, it projected lower Russian domestic demand for oil products.
"These losses could deepen should bans or public censure accelerate," the Paris-based agency said.
