Paris - Oil demand is set to rise above pre-pandemic levels by the end of next year, the IEA said, but producers have sufficient capacity rise to the challenge.
In its first detailed look at next year in its regular monthly review of the oil market, the International Energy Agency sees a gradual return of demand as vaccine distribution widens and economic activity returns to normal in many countries and sectors.
“By end-2022, demand should surpass pre-Covid levels,” it said.
Oil demand tanked by a record 8.6 million barrels per day (mbd) last year as countries shut down swathes of their economies as the coronavirus spread around the world.
The IEA expects it to rebound by 5.4 mbd this year and a further 3.1 mbd next year.
However the Paris-based agency that advises oil-consuming nations warned that “the recovery will be uneven not only amongst regions but across sectors and products.”
Demand is expected to recover faster in wealthy nations with earlier access to vaccines, while some sectors like aviation lag as some travel restrictions remain in place and more people work from home than before.
“A widespread return of the global aviation industry to normal capacity appears off the cards until most countries have reached herd immunity, which may not happen until late 2022,” said the IEA.
It said the recent surge in cases in many developing nations should serve as a reminder that the the pandemic is not over, and noted that global oil demand dipped in May due to the outbreaks.
Moreover, it doesn’t exclude new outbreaks from occurring as nations such as India aren’t expected to vaccinate a sufficient number of people until late next year while many African countries have yet to order enough doses.