Oil demand would not reached to pre-COVID-19 level until 2023 IEA predicted
Fuel consumption will average just over 101 million barrels a day in 2023
According to
the forecast of International Energy Agency (IEA), global oil demand won’t
return to pre-pandemic levels until 2023.The IEA said in its report that growth
will be subdued thereafter amid new working habits and a shift away from fossil
fuels.
Fuel
consumption will average just over 101 million barrels a day in 2023, fully
recouping the 9 million a day lost last year when lockdowns emptied roads and
grounded flights, the IEA said in a report.
But as
trends like remote-working endure, and as governments seek to limit climate
change, hydrocarbon use will falter. Oil demand in the middle of this decade
will be about 2.5 million barrels lower than the agency projected last year.
Gasoline consumption has probably peaked already.
“Oil demand
will likely never catch up with its pre-pandemic trajectory,” the Paris-based
IEA said Wednesday in its annual medium-term outlook. “There may be no return
to ‘normal’ for the oil market in the post-Covid era.”
Crude prices
have already reversed last year’s plunge, rising to almost $70 a
barrel in London. It’s partly because demand in Asia has held up, but mostly as
a result of vast production cuts by the OPEC+ alliance led by Saudi
Arabia.
The group’s
member countries stand to be the biggest winners in the years ahead, reclaiming
the market share they’re now sacrificing, the IEA said. For
OPEC’s long-standing rivals in the U.S. shale industry, however, the
agency’s outlook has dimmed significantly.
After a
vigorous recovery in global demand this year and next in tandem with the wider
economy, the IEA predicts that growth in consumption will slow, reaching 104.1
million barrels a day in 2026.
Asia will
account for 90 percent of the growth, and much of it will be from
petrochemicals and a gradual revival in aviation fuel, the IEA said. With
electric vehicles becoming more widespread and internal combustion engines more
efficient, demand for gasoline – for decades the cornerstone of the petroleum
industry – will stagnate.
As
consumption picks up, the Organization of Petroleum Exporting Countries (OPEC)
and its allies will be able to reverse the massive production cuts they made in
2020. The need for OPEC’s crude will rise from 27.3 million barrels a day this
year to reach 30.8 million a day in 2026.
For OPEC’s
competitors, it’s a darker picture. Investment in new supplies tumbled by 30
percent last year as oil prices slumped, and will recover only “marginally” in
2021, the IEA predicted.
The steepest
reversal of fortune has come for the U.S. shale oil industry, which once seemed
set to squeeze OPEC almost indefinitely.
With
companies compelled to rein in spending and reward shareholders after years of
burning through cash – and many drillers increasingly mindful of investors’
environmental concerns – U.S. production will see only “modest growth.”
The country
will remain the single biggest contributor to new supply in the outlook. But
while it was forecast last year to provide the bulk of new supplies by the
middle of the decade, the U.S. is now expected to account for just 16 percent
of the growth to 2026.
“The
industry is consolidating and is taking a more conservative approach to
investment,” while “the availability of cheap capital is not as plentiful as it
was in the boom years,” the IEA said. “The slowdown in U.S. production growth
clears the way for OPEC+ to fill much of the supply gap.”
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