Global oil demand will return to pre-pandemic levels next year, IEA says

  • Global oil demand is expected to return to pre-pandemic levels in 2022, the International Energy Agency has said.
  • COVID will continue to impact demand due to ongoing outbreaks, uneven vaccination levels, and societal shifts.
  • Accelerating production in the United States and OPEC+ countries will boost supply in 2022, the IEA said.
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Global oil demand is expected to return to pre-pandemic levels by the end of 2022, but new COVID outbreaks and low immunization levels in developing countries will make the recovery uneven, the agency said on Friday. energy international.

The IEA released its first forecast for 2022 in its Monthly Oil Report, predicting demand would build on growth of 5.4 million barrels per day in 2021 and increase by an additional 3.1 million barrels per day. day in 2022, reaching 100.6 million barrels per day by the end. next year.

The recovery will however be uneven as COVID-19 continues to affect non-OECD countries with slower vaccination rates and the pandemic has caused changes in consumer behavior.

« Continuation of telework in OECD countries […], rising electric vehicle sales and increasing car efficiency for new models will weigh on growth,” the IEA said, adding that ongoing border closures will also continue to impact on fuel controls. to travel.

Jet fuel and kerosene demand is therefore still expected to be 11% lower at the end of 2022 than before the pandemic. At the same time, demand for LPG and ethane will increase by around 5% compared to pre-pandemic levels and gasoline and diesel orders will return to their old norms.

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 higher demand in the first half of the year. However, slow vaccination rates in non-OECD countries led the IEA to revise its forecast for the second half of the year downwards.

Overall demand expectations for 2021 have therefore been lowered to 50,000 barrels per day, with annual growth now expected to be 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 supply about 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 said OPEC+ may need to revise its current supply policies in the second half of 2021 as demand-supply mismatches begin to grow and are expected to affect markets over the course of the year. last trimester in particular.

Finally, sanctions on Iranian oil exports will also play a role in increasing supply. If Tehran can 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 engine of supply growth in 2022, the agency said. .

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Felix J. Dixon