Global oil demand is expected to return to pre-pandemic levels by the end of 2022, but producers will need to increase production to keep up with the recovery, the International Energy Agency said on Friday.
The Paris-based energy agency said demand will increase in 2021 before growing at a faster rate next year, reaching 100 million barrels per day (mb / d) by the end of 2022. The forecast helped push oil prices even further above $ 70 a barrel early Friday, as demand expectations continued to provide confidence.
The IEA said it was possible for the Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, to increase production by 1.4 mb / d above its target of July 2021 to March 2022.
“Our first detailed review of the 2022 balances confirms earlier expectations that OPEC + must turn on the taps to keep global oil markets properly supplied,” the IEA said in its June Oil Market Report.
Earlier this month, OPEC + agreed to maintain its current plan to gradually ramp up oil production until July, sending crude oil futures to their highest levels in more than two years. .
West Texas Intermediate crude futures rose 0.3% to $ 70.43 a barrel early Friday. First-month prices ended at $ 70.29 on Thursday, a more than two-year high and settling at a level not seen since October 2018, according to Dow Jones Market Data. Brent crude futures rose 0.2% to $ 72.63.
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The IEA said there were still a number of factors that could affect how quickly OPEC + can reverse its pandemic-induced production cuts. “The pace at which the OPEC + cuts can be reversed will depend not only on the success in containing the spread of the virus and the growth in demand, but also on the timing of the eventual return of Iranian barrels to the market,” he said. -he declares.
The agency said that after the record 8.6 mb / d drop in 2020, demand is now expected to rebound by 5.4 mb / d in 2021 and an additional 3.1 mb / d in 2022. sectors and products . While the end of the pandemic is in sight in advanced economies, the slow distribution of vaccines could further jeopardize recovery in non-OECD countries, ”he said.
The U.S. government on Wednesday reported a weekly increase in U.S. gasoline inventories and a drop in implied demand for fuel, putting pressure on West Texas Intermediate crude prices for the session.
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On Thursday, however, oil prices traded mostly higher, after The Wall Street Journal reported that the Biden administration lifted sanctions on more than a dozen former Iranian officials and energy companies.
The IEA noted that its forecast highlighted the challenges to meet its goal recently announced roadmap for the sector to be net zero emissions by 2050.
“This roadmap notes that most of the commitments made by countries are not yet underpinned by short-term policies and actions. In the meantime, demand for oil is expected to continue to increase, underlining the enormous effort required to get on the right track to achieve the stated ambitions. “