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Slow vaccination in developing countries drags oil demand

Global appetite for crude oil will return to pre-pandemic highs by the end of next year, according to the International Energy Agency, but low coronavirus vaccination rates in emerging economies further push the end of the pandemic further.

Energy Watchdog forecasts global oil demand in the final quarter of 2022 to reach 106 million barrels for the first time since late 2019, but has also significantly reduced its forecast for resurgence in the second half of this year. Said that.

The IEA wants about 300,000 barrels of crude oil per day, less than previously thought in the last two quarters of the year, due to slow vaccination campaigns in countries such as Brazil, India and Malaysia. Said.

“The uneven distribution of vaccines at the global level means that this situation can continue from late 2021 to 2022 unless access to vaccines is improved,” the IEA said. .. The report arrives the day after the Wall Street Journal analysis showed that more people were dying from Covid-19 this year than in 2020 as a whole.

At the same time, when pandemic regulations stopped flights last spring and closed factories and restaurants, the world finally burned the large amount of oil it had accumulated. After threatening inventories to exceed storage in early 2020, oil inventories in developed countries fell in May, falling below the pre-pandemic five-year average for the first time in more than a year, the lowest since February 2020. The value IEA has been reached. Said.

The estimate from the IEA was made the day after OPEC reported that the five-year average would not reach until later this year.

An oil pump on the outskirts of Sanfiacle near Paris.


Photo:

Christian Hartmann / Reuters

Crude prices fluctuated early Friday, with global benchmark Brent crude rising 0.3% to $ 72.71 a barrel. West Texas Intermediate futures, a US gauge, rose 0.2% to $ 70.46 a barrel. Both benchmarks hit a new high for the first time in years on Wednesday, with optimism that Brent prices have exceeded $ 70 a barrel in recent weeks.

According to a Paris-based organization, the recovery in consumption is largely due to rising demand for gasoline and jet fuel as the global transport sector continues to recover, with oil producers turning on water next year. The production volume can be increased.

After US production declines in 2020 and 2021, US producers plan to increase production by 900,000 barrels per day next year, while other non-OPEC producers will increase production by another 700,000 barrels per day. Is being added to the market.

This leaves OPEC and its allies room to increase production by an additional 1.4 million barrels per day above target levels between July 2021 and March 2022, but the Alliance’s production is still 1 Less than 2 million barrels per day. On average for 2019, the IEA said.

Still, Iran’s supply situation is unknown to producers around the world. President Biden’s administration on Thursday lifted sanctions on three former Iranian officials and several energy companies as negotiations to revive the 2015 nuclear deal were stalled.

It may only be a sign of what is to come. If the parties reach an agreement in the coming weeks, Iran’s production could reach 3.8 million barrels per day (up 1.4 million barrels from current levels) by the end of next year, the report added. ..

While supply growth and expectations of a return to 2019 levels of oil demand next year represent a return to pre-pandemic normality of the global economy, the IEA also said that governments and businesses would still be net zero by the middle of the century. It is far from achieving the emission of.

This goal is crucial in limiting global temperature rise to 1.5 degrees Celsius above pre-industrial levels. This is the goal set by the 2015 Paris Agreement.

Write to David Hodari (David.Hodari@dowjones.com)

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Slow vaccination in developing countries drags oil demand

Source link Slow vaccination in developing countries drags oil demand

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