The world’s oil supply is set to outpace demand starting this month, resulting in a chunky surplus next year, the IEA have said in a statement.
“Much needed relief for tight markets is on the way,” the Paris-based energy watchdog said in its latest Oil Market Report (OMR).
The IEA sees oil consumption growing by 5.4mn b/d in 2021 and a further 3.3mn b/d next year, taking next year’s total demand to 99.5mn b/d.
“Due to new restrictions on international travel, we have revised down our global oil demand forecast for 2021 and 2022 by 100,000 b/d on average, primarily to account for reduced jet fuel use,” the agency said. “But the surge in new Covid-19 cases is expected to temporarily slow, but not upend, the recovery in oil demand that is underway.”
It anticipates demand for road transport fuels and petrochemical feedstocks “to continue to post healthy growth”, assuming a more muted hit on the economy compared with previous Covid-19 waves thanks to vaccines.
On the supply side, the IEA expects the US, Canada and Brazil to pump at their highest ever annual levels, lifting overall non-Opec+ output by 1.8mn b/d in 2022″ after a 450,000 b/d increase this year. The US is set to account for 56pc of the growth.
“Saudi Arabia and Russia could also hit records if remaining Opec+ cuts are fully unwound. In that case, global supply would soar by 6.4mn b/d next year compared with a 1.5mn b/d rise in 2021,” the OMR said.
“We expect Opec+ to pump 1.7mn b/d above the call on its crude in the first quarter of 2022, versus a previous 1.1mn b/d, provided it continues to unwind its cuts and assuming Iran remains under sanctions,” the IEA said. “By the second quarter of 2022, Opec+ crude oil output could rise to 2mn b/d above the call.”
For more information visit www.opec.org
