The oil market “seems to face on a greater footing than it has for a while,” the IEA wrote in its newest month-to-month report.
The emergence of Omicron on the finish of November “sparked a steep sell-off in oil, however preliminary pessimism has now given method to a extra measured response,” it stated.
“The surge in new Covid-19 circumstances is predicted to briefly sluggish, however not upend, the restoration in oil demand,” the IEA wrote.
It stated “new containment measures put in place to halt the unfold of the virus are prone to have a extra muted influence on the economic system versus earlier Covid waves, not least due to widespread vaccination campaigns.”
The IEA, which unites oil-consuming international locations and advises governments on power coverage, stated it had revised downwards its forecast for world oil demand by a mean 100,000 barrels per day for each this yr and subsequent yr attributable to new restrictions on worldwide journey.
The company stated it’s now pencilling in a rise in world oil demand of 5.4 million barrels per day in 2021 and by 3.3 million in 2022, when it’s going to to return to pre-pandemic ranges at 99.5 million bpd.
On the output aspect, world oil manufacturing was poised to outpace demand from December, the IEA predicted, pushed by greater manufacturing in the USA and the international locations that make up the so-called OPEC+ group of oil producers.
Earlier this month, the Group of Petroleum Exporting Nations (OPEC) and their allies agreed to stay to deliberate will increase in output in January, regardless of the financial uncertainties linked to Omicron.
“Because the upward provide development extends into 2022, the US, Canada and Brazil are set to pump at their highest-ever annual ranges,” IEA stated.
“Saudi Arabia and Russia may additionally set data, if remaining OPEC+ cuts are absolutely unwound.”
This might result in surplus provide of 1.7 million bpd within the first quarter of 2022 and a pair of.0 million bpd within the second quarter.
“If that had been to occur, 2022 may certainly form as much as be extra comfy,” the IEA stated.