• Brent Crude$68.63 -0.48%
  • Natural Gas$2.96 +0.58%
  • Gasoline$2.14 -0.72%
  • Heating Oil$1.99 -0.24%
  • Gold$1784.10 +0.47%
  • Silver$26.50 -0.14%
  • Copper$4.54 -NaN%
  • OPEC$66.67 +2.43%
  • WTI Crude$65.25 -0.58%
  • Home
  • News
  • Oil & Gas
  • IEA confirms Global Oil Demand will not recover until 2023, regardless of the localized growth

IEA confirms Global Oil Demand will not recover until 2023, regardless of the localized growth
Oil & Gas | 17 March 2021

The Global oil demand will not return to pre-pandemic levels until 2023, and growth will be curbed from that point in the midst of new working habits and a shift away from fossil fuels, the International Energy Agency said, as reported by Bloomberg

Fuel consumption will average a little more than 101 million barrels per day in 2023, completely recovering the 9 million a day lost a year ago when lockdowns purged streets and grounded flights, the IEA said in a report.

But as trends like remote-working suffer and as governments look to restrict climate change, hydrocarbon use will flounder. Oil demand in the middle of this decade will be around 2.5 million barrels that is lower than that of the agency projected a year ago. Gasoline consumption has most likely topped as of now.

"Oil demand won't probably ever catch up with its pre-pandemic trajectory," the Paris-based IEA said Wednesday in its yearly medium-term outlook. "There might be no return to ‘normal’ for the oil market in the post-Covid time."

Crude prices have effectively turned around a year ago's dive, ascending to nearly $70 a barrel in London. It's somewhat on the grounds that demand in Asia has held up, however generally because of vast production cuts by the OPEC alliance led by Saudi Arabia.

The Biggest Winners

The group’s member nations remain to be the biggest winners in the years ahead, recovering market share they're currently forfeiting, the IEA said. For OPEC's long-standing rivals in the U.S. shale industry, in any case, the agency’s outlook has darkened altogether.

After a lively recuperation in worldwide demand this year and next in tandem with the more extensive economy, the IEA predicts that consumption growth will moderate, arriving at 104.1 million barrels per day in 2026.

Asia will represent 90% of the development, and a lot of it will be from petrochemicals and a slow recovery in aviation fuel, the IEA said. With electric vehicles turning out to be more widespread and internal combustion engines more productive, demand for gasoline, for quite a long time the cornerstone of the petroleum industry will stagnate.

As consumption picks up, the Organization of Petroleum Exporting Countries and its partners will want to reverse the massive production cuts they made in 2020. The requirement for OPEC's crude will ascend from 27.3 million barrels per day this year to reach 30.8 million per day in 2026.

Worldwide crude markets could even start to tighten around the middle of the decade if U.S. sanctions stay set up on OPEC member Iran. Saudi Arabia, Iraq, and other Gulf exporters would have to pump close to record levels in this situation, and the group’s spare production capacity would diminish to its most minimal since 2016.

The Falling Investments

For OPEC's rivals, it's a darker picture. Investment in new supplies tumbled by 30% a year ago as oil costs drooped, and will recuperate only “marginally” in 2021, the IEA anticipated. The steepest inversion of fortune has come for the U.S. shale oil industry, which once appeared to be set to crush OPEC uncertainly.

With organizations constrained to get control over spending and award shareholders after years of burning through cash and numerous drillers progressively aware of investors’ environmental concerns, U.S. production will see just “modest growth.”

The nation will stay the single greatest supporter of new supply in the outlook. But, while it was conjecture a year ago to give the majority of new supplies by the middle of the decade, the U.S. is currently expected to represent only 16% of the growth to 2026.

"The industry is uniting and is adopting a more moderate strategy to investment," while "the accessibility of modest capital isn't however abundant as it might have been in the boom years," the IEA said. "The slowdown in U.S. production growth clears the route for OPEC+ to fill a lot of the supply gap."

A Lesser Share

All things considered, any feeling of victory for OPEC and its accomplices will be relative.

In five years OPEC+'s market share, at about 52% will be lower than the 57% it controlled when the partnership formed in 2016. While OPEC countries remain to help supply in coming years, this will generally comprise of restoring output they ended, instead of deploying new capacity.

A further danger for OPEC+ and other producers is that the disadvantage for demand could be more profound than expected, the IEA cautioned. On the off chance that governments act more quickly on environmental changes than anticipated, and consumers shun business travel and embrace recycling, about 5.6 million barrels of day-by-day oil demand could be eliminated by 2026.

"Demand could top sooner than recently suspected," said the agency, which set a level around the turn of this decade in its most recent long-term outlook. “Stronger policies and behavior changes could bring a peak in demand soon.”


You Can Chat or Close the window



This feature provides information about the activities on your EEXCOM account.

Recent activities:

Access Type (Browser, mobile, etc.)LocationIPDate & Time