LONDON (Reuters) – Vaccine rollouts are improving the outlook for worldwide oil demand, according to the International Energy Agency (IEA). But experts are also pointing out that increasing cases in some big oil-consuming nations indicate that recovery could be fragile.
In its monthly study, the IEA said that demand is looking better.
The huge problem in worldwide oil inventories that accumulated during last year’s pandemic shakeup shock is waning, and vaccination campaigns are picking up steam, and the worldwide economy seems to be on a more solid footing.
The Paris-based watchdog expressed concern about new outbreaks of the coronavirus, citing growing cases in Europe, Brazil, and the United States.
Nonetheless, the IEA forecast that worldwide oil demand and supply would rebalance in the second part of 2021, and that producers would need to pump an additional two million barrels daily to meet anticipated demand.
OPEC and its partners, such as Russia, will most likely be able to adapt their production to demand, no matter if the pandemic is under control or not, according to the IEA.
The bloc’s monthly supply calibration gives it the flexibility to meet demand by bringing up or adjusting production lower if demand recovery falls short.
According to the IEA, commercial oil stored in OECD countries dropped for the seventh month in a row in February, indicating a climb in demand and increased imports in the future.
The IEA cautioned that less-developed nations would face a steeper climb out of the demand well built by the pandemic, as the disparities between nations with immediate access to the vaccine and those without became more pronounced.
Some developing nations with lower access are in a more difficult position, with new coronavirus cases possibly slowing economic activity and mobility.
The situation in some major non-OECD oil consumers (Brazil, Iran, and India) is currently deteriorating sharply.