Global oil demand will return to pre-pandemic levels next year, although COVID hotspots will make recovery uneven: IEA
- Global demand for oil is expected to return to pre-pandemic levels in 2022, the International Energy Agency said.
- COVID will continue to impact demand due to continued epidemics, uneven immunization levels and societal changes.
- Accelerating production in the United States and OPEC + countries will increase supply in 2022, the IEA said.
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Global demand for oil is expected to return to pre-pandemic levels by the end of 2022, but new outbreaks of COVID and low levels of immunization in developing countries will make the recovery uneven, the agency said on Friday. international energy.
The IEA released its first forecast for 2022 in its Monthly Oil Report, predicting that demand would build on growth of 5.4 million barrels per day in 2021 and increase by 3.1 million barrels per day. additional in 2022, reaching 100.6 million barrels per day by the end. next year.
The recovery will be uneven, however, as COVID-19 continues to affect non-OECD countries with slower vaccination rates and the pandemic has caused changes in consumer behavior.
“The pursuit of teleworking in OECD countries […], increased sales of electric vehicles and increased efficiency of cars for new models will weigh on growth. The IEA said, adding that the current border closures will also continue to have an impact on fuel orders. to travel.
Demand for jet fuel and kerosene is therefore still expected to be 11% lower at the end of 2022 compared to before the pandemic. At the same time, demand for LPG and ethane will increase by about 5% from pre-pandemic levels, and gasoline and diesel orders will return to their old standards.
The IEA left its outlook for 2021 demand virtually unchanged from last month. The more stable COVID-19 situation and continued economic recovery and reopening in OECD countries led to increased demand in the first half of the year. However, the low vaccination rates in non-OECD countries have led the IEA to downgrade its forecasts for the second half of the year.
Overall demand expectations for 2021 have therefore been lowered to 50,000 barrels per day, with expected annual growth now of around 96.4 million barrels per day.
Global oil supply is expected to grow faster in 2022, as the United States is expected to recover from two consecutive years of declining production and will account for much of the increase in supply outside of OPEC +. The IEA predicts that non-OPEC countries will deliver around 1.6 million barrels per day more next year, leaving OPEC + to produce an additional 1.4 million barrels per day to meet growing demand .
“The increase in non-OPEC + oil supply next year comes despite financial constraints and growing pressure from climate activists and shareholders on big oil companies and independents,” the report said.
In the shorter term, the IEA has said that OPEC + may need to revise its current sourcing policies in the second half of 2021, as the disparities between demand and supply start to grow and are expected to affect markets particularly in the region. last trimestre.
Finally, sanctions on Iranian oil exports will also play a role in increasing supply. If Tehran manages to strike a deal with world powers over its nuclear activities and sanctions are lifted, Iranian crude could flood markets and make the country the main driver of supply growth in 2022, the Iranian crude said. agency.