The oil market could face another volatile year but demand is surging higher as the sector has weathered the impact of the Omicron coronavirus variant, the International Energy Agency (IEA) cautioned.
The IEA revised its demand estimates, saying it increased by 5.5 million barrels per day (bpd) in 2021 and would grow by 3.3 million bpd in 2022 — 200,000 bpd higher than its previous estimate.
This will take total demand above pre-Covid levels in 2022, at 99.7 million barrels per day.
While Covid cases have soared, “measures taken by governments to contain the virus are less severe than during earlier waves and their impact on economic activity and oil demand remain relatively subdued,” the IEA said, according to an AFP report.
But the agency, which advises governments on energy policy, said supply growth expectations were being tempered by “disruptions and production shortfalls” by some members of the Opec+ group of top oil producers.
“If demand continues to grow strongly or supply disappoints, the low level of stocks and shrinking spare capacity means that oil markets could be in for another volatile year in 2022,” the IEA said.
Oil prices tanked as the pandemic emerged in 2020, but have recovered since then, reaching their highest levels in more than seven years on Tuesday.