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Jun 11, 2021 - Energy & Environment

Oil thirst projected to surpass pre-COVID mark by the end of 2022

Ben Geman
Illustration of a oil barrel with a clock face on it.

Illustration: Aïda Amer/Axios

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.
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