IEA, OPEC Flag Concerns on Global Oil Demand
During the week, the International Energy Agency and the Organization of the Petroleum Exporting Countries flagged concerns around global oil demand in their latest monthly reports as a surge of COVID-19 cases from the delta variant which cause increased uncertainty.
In its August report, the IEA said the month-over-month increase of 3.8 million barrels per day in global oil demand witnessed June “abruptly reversed course” in July.
The agency downgraded its outlook for the remainder of 2021, citing worsening progression of the COVID-19 pandemic and revisions to historical data. It now anticipates a rise of 5.3 million barrels a day on average this year and an additional 3.2 million barrels a day next year, compared with an increase of 5.4 million barrels a day for 2021 and 3 million barrels a day for 2022 projected previously.
OPEC maintained its 2021 global oil demand projections from June despite a marginally upward revision to economic growth, expecting demand to grow about 6 million barrels a day to an average of 96.6 million barrels a day. It also continues to anticipate a year-over-year growth of 3.3 million barrels a day in 2022.
On global oil supply, the IEA said it expects an increase of 1.7 million barrels a day to 96.7 million barrels in July following the North Sea’s strong recovery after maintenance and Saudi Arabia ending its extra voluntary production cut.
The forum expects global output to register further gains in the coming months following OPEC+’s new agreement to roll back its remaining restrictions along with increases of 600,000 barrels a day in 2021 and 1.7 million barrels a day in 2022.
The countries expect non-OPEC liquids to increase 1.1 million barrels in 2021 to an average of 64 million barrels amid an upward revision in non-OPEC liquids supply growth projections for 2021 and 2022 of 0.27 million barrels a day and 0.84 million barrels a day, respectively.
The intergovernmental organization, which cited Canada, Russia, China, the U.S., Norway and Brazil as the primary drivers for growth, anticipates liquid supply growth of 2.9 million barrels a day in 2022.
On prices, the IEA said the Q2 crude price growth could not be sustained in July amid concerns that the new delta variant cases and weaker economic indicators may weigh on oil demand recovery amid an increase in supply. Oil prices waned amid similar fears adversely affecting recovery as supply increased.
Read Also: IEA Sees 3.1% Increase in Global Oil Demand in 2022
The IEA said a continued sharp fall in global oil inventories, saying it now expects OPEC+ to supply below 200,000 barrels a day below the call on its crude during Q4 versus a maximum deficit of 2 million barrels a day projected previously. However, the agency expects a rebound to surplus in 2022 provided that OPEC+ continues to revoke restrictions and producers not partaking in the agreement step up in response to increased prices.
IEA, OPEC Flag Concerns on Global Oil Demand
