A resurgence in Covid-19 cases globally has prompted the International Energy Agency (IEA) to cut back its expectations of global oil demand growth for this year.
The Paris-based agency said in its latest oil market report it is revising downwards its previous forecast by 600,000 barrels per day for the first quarter of 2021 and by 300,000 bpd for 2021 as a whole.
Global oil demand is now expected to increase by 5.5 million bpd this year to 96.6 million bpd, following what the IEA called an “unprecedented collapse” of 8.8 million bpd in 2020 as the pandemic choked economic output.
However, stronger growth is expected in the second half of the year as efforts to vaccinate populations spur an acceleration in economic activity.
'Shifting back into growth mode'
“The global vaccine roll-out is putting fundamentals on a stronger trajectory for the year, with both supply and demand shifting back into growth mode following 2020’s unprecedented collapse,” said the IEA.
“But it will take more time for oil demand to recover fully as renewed lockdowns in a number of countries weigh on fuel sales.”
After falling by a record 6.6 million bpd in 2020, world oil supply is set to rise by more than 1 million bpd this year. The Opec+ group, which includes Opec nations and Russia, will add more than those outside the bloc, the IEA said.
“There may be scope for higher growth given our expectations for further improvement in demand in [the second half of 2021],” the IEA said.
“After holding flat at 92.8 million bpd in December, global supply is rising this month with Opec+ due to ramp up during January.”