Oil demand on track to exceed pre-pandemic peak

Global demand for oil is expected to exceed pre-pandemic levels by the end of 2022, at odds with efforts to contain global warming, predicts the International Energy Agency (IEA) on Friday.

“Global oil demand will continue to recover,” against a background of vaccination and economic recovery, she writes in a monthly report containing her first detailed forecasts for next year.

“By the end of 2022, demand is expected to surpass pre-Covid levels,” predicted the agency, which last month underlined in a shattering report the need to reduce this demand to prevent a climate catastrophe.

After a record decline of 8.6 million barrels (mb / d) in 2020, global demand is expected to rebound by 5.4 mb / d this year and then by 3.1 mb / d next year, to settle at 99.5 mb / d on average.

It is expected to be 100.6 mb / d in the fourth quarter of 2022, according to the IEA. The peak in global demand had so far been reached in the fourth quarter of 2019, just before the onset of the crisis, at 100.5 mb / d.

“The recovery will be uneven not only among regions but also between sectors and products,” notes the IEA, however.

She thus judges that the end of the pandemic is in sight in developed countries but that the low rate of vaccination could still jeopardize the recovery in other countries.

“Petrochemicals will be encouraged by robust demand for plastics while global trade will support demand for marine fuels,” she further predicts.

But “the aviation sector will be the slowest to recover as some travel restrictions are expected to remain in place until the pandemic is firmly under control.”

Gasoline should also remain below its pre-crisis level due to the sustainability of teleworking in many business sectors and the growth of electric vehicles.

– “enormous efforts” –

“Meeting the expected growth in demand should not be a problem,” said the IEA, highlighting in particular the additional production capacities of OPEC and its allies, including Russia.

These countries, grouped together in OPEC +, had voluntarily restricted their production to support prices during the crisis but are now starting to turn on the tap.

Even after increasing their production by around 2 mb / d in May and June, the OPEC + countries will still have the potential to produce an additional 6.9 mb / d, estimates the IEA.

And if international sanctions against Iran are lifted, an additional 1.4 mb / d could be put back on the market fairly quickly.

On the other hand, the IEA once again underlines the difficulties posed in putting the world on the path to carbon neutrality and limiting global warming.

“Oil demand should continue to increase, underlining the enormous efforts required to achieve the stated ambitions,” she notes.

The IEA, which advises developed countries on their energy policies, had in a report published in May underlined the decisions to be taken in an attempt to keep global warming under control in accordance with the Paris Agreement.

It recommended in particular to forget from now on any oil or gas exploration project and not to sell new thermal cars beyond 2035.

It also assumed that oil demand “never returns to its 2019 peak,” the IEA wrote in May. It should therefore decline regularly to reach 72 mb / d in 2030, then 24 mb / d in 2050, i.e. a drop of nearly 75% by this time.

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