The oil price suffered a setback in early December when the world became aware of the omicron variant of the coronavirus, creating uncertainty over economic activity. But it did not last long. Since its lowest on Dec. 1, the price of North Sea Brent has risen nearly 30 percent, and in recent days has reached nearly $90 a barrel, the highest in more than seven years.
As a result, the International Energy Agency (IEA) is revising its demand forecast. It appears in the agency’s monthly oil market report, which will be published on Wednesday.
After lowering the estimate by 100,000 bpd for both 2021 and 2022 a month ago, the IEA is now working to increase both by 200,000 bpd. The agency expects demand to rise by 3.3 million barrels per day in 2022, after rising by 5.5 million barrels per day last year. In doing so, the world will return to pre-pandemic levels, with a total of 99.7 million barrels per day on average this year.
“Two years after shaking the markets, the Corona virus again caused a record infection. But this time the wave had a more subdued effect on oil consumption. Indeed, mobility indicators remain strong, and demand for oil has been stronger than expected in recent months,” she wrote The International Energy Agency in its latest report.
– May there be another volatile year
Now the agency is also warning that strong demand could lead to a tight market beyond 2022 – despite the fact that oil production is expected to rise sharply during the year, both as a result of countries in the Saudi-led OPEC+ coalition continuing to increase. their production, and that countries like the United States can set new records.
“If demand continues to rise sharply and supply disappoints, low inventory levels and low spare capacity mean oil markets could see another volatile year in 2022,” the IEA wrote.
And this despite the fact that Saudi Arabia and Russia in OPEC +, as well as the United States, Canada and Brazil could increase production to an all-time high. OPEC+ has so far stuck to plans for a gradual escalation after the group agreed to historic cuts in 2020 to prop up the oil price after the pandemic spread.
This means that the supply side of the market will rise by as much as 6.2 million barrels per day this year, compared to 1.5 million barrels per day in 2021, according to the International Energy Agency.
Part of the problem is that oil stocks are at a much lower level now than they were before the pandemic. In OECD countries, stocks have not decreased in seven years, the IEA wrote.
At the same time, higher production from OPEC+ will also mean that the available production capacity of countries, that is, production that can start when needed in the market, will be lower. By the second half of the year, it may have fallen from five million barrels per day to less than three million, which will mainly be in the hands of Saudi Arabia and the United Arab Emirates. (Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.
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