IEA states new variant will slow but not upend oil recovery

The IEA has downgraded oil price estimates for 2022 as demand recovery takes hold. A fresh wave of coronavirus infections will temporarily slow, but not upend, the oil demand recovery, according to the International Energy Agency.

Its monthly report showed a downgrading of growth forecasts by 100,000 barrels per day for 2021 and 2022 as the Omicron variant impacts the consumption of jet fuel, but it also said the supply of oil would outpace demand as early as this month.

“Initial pessimism has given way to a more measured response,” the IEA said.

Demand is estimated to rise by 5.4m bpd in 2021 and a further 3.3m bpd in 2022, rebounding to pre-pandemic levels.

The IEA has revised and lowered its 2022 oil price assumptions by 15 percent compared with the previous monthly report, which it said should underpin its forecasts.

Widespread vaccination campaigns were expected to mute any economic impact and demand for road transport fuels and petrochemical stocks would “continue to post healthy growth,” it said.

Tanker tonne miles still lag pre-pandemic levels, despite rising demand and additional supplies coming to the market, according to the IEA.

November tonne miles for crude, product and chemical tankers were estimated at 42bn according to the IEA, citing data from Kpler.

Although higher than the 39bn tonnes in the same month of 2020, figures remain well below 2019 and 2018 levels. Tonne miles were 44bn in 2019 and 45bn tonne miles in 2018 for November, data show.

“Tanker traffic continues to move in parallel to the trend in 2020 at around 5 percent more tonne-miles year-on-year, but remains below 2019 levels,” the report said. “The overhang in tanker capacity persists and continues to pressure the market.”

For more information visit www.iea.org