After three consecutive months of declines due to the Delta variant, global oil demand is set to rebound with a 1.6-million-bpd jump in October and continue rising through the end of the year, the International Energy Agency (IEA) said on Tuesday.
In its closely watched Oil Market Report, the agency slightly revised down its full-year 2021 demand growth projection, but noted that pent-up demand and vaccine programs are expected to give rise to “a robust rebound” in global oil demand from the fourth quarter of this year.
The IEA now sees oil demand growing worldwide by 5.2 million bpd in 2021, down by 110,000 bpd compared to the forecast in last month’s assessment. In the August report, the agency expected oil demand to rise by 5.3 million bpd in 2021 and by another 3.2 million bpd in 2022. A month ago, the IEA said that mobility restrictions in Asia to fight the Delta variant were set to slow global oil demand growth in the second half of 2021.
In this month’s report, the agency revised down its global oil demand forecast for August and September by nearly 600,000 bpd as China and a number of other South East Asian countries enforce more mobility restrictions.
However, “Strong pent-up demand and continued progress in vaccination programmes should underpin a robust rebound from 4Q21,” said the IEA, which raised by 85,000 bpd its estimates for next year’s demand growth.
“The market should shift closer to balance starting from October if OPEC+ continues to unwind production cuts. Even so, it is only by early 2022 that supply will be high enough to allow oil stocks to be replenished,” the IEA said.
The agency’s demand estimates are more conservative than OPEC’s latest outlook released yesterday, which showed that the cartel sees in 2022 robust economic growth and stronger recovery in fuel consumption that will lead to oil demand averaging 100.8 million bpd and exceeding pre-COVID levels.
Next year, oil demand worldwide is now expected to jump by around 4.2 million bpd compared to 2021, an upward revision of 900,000 bpd from last month’s assessment, OPEC said in its closely watched Monthly Oil Market Report (MOMR) on Monday.