The International Energy Agency (IEA) has forecast that the world will burn more oil than ever this year as China’s emergence from Covid-19 lockdowns returns global crude demand to its pre-pandemic trajectory. It said in its monthly report that it expects oil demand to grow to a record 101.9 million barrels a day this year, propelled almost entirely by booming demand in Asia. The figure is 200,000 barrels a day more than the IEA was forecasting last month. That translates into 2 million barrels a day of annual growth this year. Asian nations will account for 1.4 million barrels a day of that, and China alone will account for 900,000 barrels a day, the IEA said.
Source: International Energy Agency
The IEA also boosted its supply forecast, attributing that to the surprising resilience of Russian crude production despite Western sanctions.
Global Covid-19 restrictions knocked crude oil demand sharply, sending prices down. While most experts assumed crude demand would eventually return to pre-pandemic levels, it has taken longer than some had expected and has yet to reach its 2019 peak of 100.5 million barrels a day.
Two weeks ago, Russia said it would cut its oil production by 500,000 barrels a day in March, which it said was a voluntary choice made in response to the sanctions. The IEA said it was more likely that Moscow was forced into the move as it struggles to find buyers for its oil.
Longer term, the IEA has projected overall oil demand would peak in the middle of the next decade, plateauing until about 2050, and then falling. It cited an accelerated push by governments away from fossil fuels, driven largely by climate change concerns, but also in part by energy-security concerns stemming from Russia’s invasion of Ukraine.
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