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 evercome 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.