Oil thirst projected to surpass pre-COVID mark by the end of 2022
Global oil demand will exceed pre-pandemic levels by the end of next year, the International Energy Agency estimated Friday morning.
Why it matters: When demand went into a historic decline last year, there was lots of discussion about the revival timeline — and whether it would ever come all the way back.
- Friday's monthly outlook — IEA's first detailed look at oil supply and demand balances over the course of 2022 — helps clarify that picture.
- Pandemics are a ghastly reason for demand cuts, but the report nonetheless underscores hurdles facing policymakers as scientists warn that a fast transition from fossil fuels is needed to limit global warming.
By the numbers: The agency sees demand, which collapsed by 8.6 million barrels per day (bpd) last year, reviving by 5.4 million bpd in 2021 and another 3.1 million bpd in 2022.
- That would restore global demand to well over 100 million bpd by the end of next year.
- "Our first detailed look at 2022 balances confirms earlier expectations that OPEC+ needs to open the taps to keep the world oil markets adequately supplied," IEA said.
How it works: The report sees jet fuel demand recovering slowly as some travel restrictions remain.
- Telework, electric cars and efficiency offset some gasoline demand despite increased driving as the pandemic eases.
- IEA sees petrochemical manufacturing boosted by "robust" plastics demand, among other factors driving demand recovery.
- But needless to say there are known unknowns, and the report cautions that slow vaccine rollouts could jeopardize demand recovery outside the OECD.
The big picture: The new estimates highlight the challenges outlined in IEA's recent analysis of what's needed to reach net-zero emissions by 2050, the agency said.
- "This roadmap notes that most pledges by countries are not yet underpinned by near‐term policies and measures."
- "In the meantime, oil demand looks set to continue to rise, underlining the enormous effort required to get on track to reach stated ambitions," IEA adds.