An oil tanker truck drives through the drilling holes of an oil well operated by Chevron Corporation in San Ardo, California, U.S., on Tuesday, April 27, 2021.
David Paul Morris | Bloomberg | beautiful pictures
The International Energy Agency said demand for oil would be lower than expected next year, as it revised its outlook for a 100,000 bpd drop for both the rest of this year and 2022.
In its Oil Market Report, the IEA said that global oil demand is now expected to grow by 5.4 million bpd in 2021 and 3.3 million bpd in 2022 to reach pre-pandemic levels. translates to 99.5 million bpd globally.
The recovery is expected to be impacted by an increase in new Covid-19 cases, with jet fuel being hit hard, the report said. Its authors note that the emergence of the new omicron variant has led to new restrictions on international travel.
However, the IEA added that while an increase in new Covid cases is expected to slow demand, the recovery already underway will not be completely derailed.
Manufacturing to surpass demand
Despite this uncertainty, output is poised to surpass demand from December, led by increased production from the US and OPEC+ countries, the report said. The IEA says this upward trend will last through 2022, with the US, Canada and Brazil pumping at their highest ever annual rates.
“Saudi Arabia and Russia could also hit records if the remaining OPEC+ cuts are not committed at all,” the IEA said. “In that case, global supply would increase by 6.4 million bpd next year compared with an increase of 1.5 million bpd in 2021.”
Regarding oil prices, the IEA also revised its outlook down.
“Our oil price assumption (based on a futures curve) in 2022 is about 15 percent lower than reported last month,” the report’s authors said. “Brent average price $70.80/bbl in 2021 and $67.60/bbl in 2022.”
