Feb 11, 2021 - Energy & Climate

IEA sees long and "fragile" wait for oil's post-pandemic return

Ben Geman

Illustration of an oil barrel on a spring bouncing back and forth. — Illustration: Aïda Amer/Axios

Oil demand is slated for a large bounce-back from the pandemic that will tighten the market a lot, but it's going to take a while, the International Energy Agency said.

Why it matters: "The rebalancing of the oil market remains fragile in the early part of 2021 as measures to contain the spread of COVID-19, with its more contagious variants, weigh heavily on the near-term recovery in global oil demand," IEA said in its monthly oil market analysis today.

The big picture: IEA sees demand rising on a full-year basis in 2021 by 5.4 million barrels per day, which means the recovery of about 60% from last year's pandemic-fueled collapse.

But it'll take a while. They see demand actually falling this quarter compared to the last three months of 2020, while a "favourable economic outlook underpins stronger demand in the second half of the year."
The tighter market is on the way though (with all the necessary caveats about COVID's trajectory).
IEA sees global crude stockpiles falling significantly in the second half of the year as demand rises, while new crude supplies from outside OPEC are modest.

Go deeper: IEA sees tighter oil market despite demand caution, modest supply optimism (S&P Global Platts)

Add Axios on Google

IEA sees long and "fragile" wait for oil's post-pandemic return

What to read next