Nov 12, 2020 - Energy & Environment

A vaccine won't rescue oil markets anytime soon

A barrel of oil wearing a mask.

Illustration: Sarah Grillo/Axios

A COVID-19 vaccine is "unlikely to ride to the rescue of the global oil market for some time," the International Energy Agency warned as they deepened their estimate of the pandemic's near-term effect on oil demand.

Why it matters: This morning's monthly oil market report is IEA's first analysis of where supply and demand is heading since Pfizer and BioNTech announced promising early results from its vaccine trials.

What they're saying: "[I]t is far too early to know how and when vaccines will allow normal life to resume. For now, our forecasts do not anticipate a significant impact in the first half of 2021," IEA said.

  • "Vaccines are unlikely to significantly boost demand until well into next year," they said.

Threat level: Surging caseloads and new lockdowns led IEA to increase their estimate for how much oil demand will fall this year.

  • IEA sees demand falling by 8.8 million barrels per day compared to 2019 levels, which is 400,000 barrels per day more than their prior monthly analysis (though revisions to past data also play a role).

What's next: Market watchers are looking to see whether OPEC+ will revisit plans to ease their joint supply curbs at the end of the year.

  • "With a COVID-19 vaccine unlikely to ride to the rescue of the global oil market for some time, the combination of weaker demand and rising oil supply provides a difficult backdrop to the meeting of OPEC+ countries due to take place on 1 December," IEA said.

Where it stands: "Talks between OPEC and its allies are zeroing in on a delay to next year’s planned oil-output increase of three to six months, according to several delegates," Bloomberg reports.

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