Oil demand to surpass pre-pandemic levels by end of 2022, says IEA

Oil demand is expected to exceed pre-coronavirus levels by the end of 2022, the International Energy Agency said on Friday, with the body calling on world producers to “open the taps”.

Consumption declined by a record 8.6m barrels a day last year as coronavirus raged around the world. It is expected to rebound by 5.4m b/d this year as vaccines are rolled out and countries open up again.

In 2022, the IEA expects a further 3.1m b/d increase, to average 99.5m b/d with an increase at the end of the year that will surpass the level of demand before the coronavirus crisis took hold.

Brent crude, the international oil benchmark, ticked 0.2 per cent higher to $72.66, after closing at its highest since May 2019 on Thursday.

The agency reiterated that Opec and its allies needed to “open the taps” to boost oil production and keep the world well supplied. The so-called Opec+ group is expected to raise production by 2m b/d between May and July.

Still, the Paris-based body warned in its monthly oil market report that “the recovery will be uneven not only among regions but across sectors and products”.

Slow vaccine distribution, it said, could “jeopardise” any rebound.

The aviation sector would be the slowest to recover as governments kept in place certain travel restrictions “until the pandemic is brought firmly under control”, the IEA said. Petrol demand could also take longer to recover as work-from-home practices continue and the rising adoption of electric vehicles offsets increased mobility.

The IEA said one “wild card” for the market was the return of Iranian oil supply should the producer agree a deal with the US to lift sanctions. This could lead to production rising to almost 3.2m b/d by the end of the year, up 750,000 b/d from current levels, according to IEA estimates.

Yet the body, in a nod to its bombshell net-zero emissions road map published last month, said the short-term policies of producer economies stood in opposition to a call to end all new exploration of oil, gas and coal and funding of projects if the world is to meet the 2050 goal.

“This road map notes that most pledges by countries are not yet underpinned by near‐term policies and measures. In the meantime, oil demand looks set to continue to rise, underlining the enormous effort required to get on track to reach stated ambitions,” said the IEA.

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