Int. Energy Agency oil demand forecast down due to surge in COVID-19 cases

By Firdevs Yuksel

ISTANBUL (AA) - The International Energy Agency (IEA) revised down its global oil demand estimates for 2021 and 2022 by around 100,000 barrels per day (bpd) compared to last month's assessment due to the new surge in COVID-19 cases.

Global oil demand is now set to rise by 5.4 million bpd to 96.2 million bpd in 2021 and a further 3.3 million bpd in 2022, when it returns to pre-pandemic levels at 99.5 million bpd, according to the IEA's oil market report on Tuesday.

The agency attributed its revision to the new containment measures put in place to halt the spread of the virus, which are projected to have an immediate impact on air travel and jet fuel consumption.

"A new surge in COVID-19 cases is expected to slow, but not derail, the recovery in oil demand that is underway. World oil demand is on track to rise by nearly 1 million bpd in 4Q21 to 98.6 million bpd before falling seasonally by 740,000 bpd in 1Q22," the agency said.

- Global supply rises in November

The IEA said global oil supply increased by 970,000 bpd in November to 98.37 million bpd, led by production increases from the US, Canada, Saudi Arabia and Iraq, which was closing the gap in demand.

World supply in November was also up by nearly 2 million bpd year on year, the agency said.

OPEC crude oil production reached 27.75 million bpd in November, recording an increase of 310,000 bpd compared to the previous month.

Non-OPEC production also saw an increase of 660,000 bpd to 65.41 million bpd.

- Production to outpace demand

According to the agency, global oil production is poised to outpace demand starting from December, as the US and OPEC+ led by Saudi and Russia ramp up more output to provide relief to a tight oil market.

"As this upward supply trend extends into 2022, the US, Canada and Brazil look set to pump at their highest ever annual levels, lifting overall non-OPEC+ output by 1.8 million bpd in 2022. Saudi Arabia and Russia could also hit records if remaining OPEC+ cuts are fully unwound. In that case, global supply would soar by 6.4 million bpd next year compared with a 1.5 million bpd rise in 2021," the agency said.