Feb 11, 2021 - Energy & Environment

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

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)

Go deeper