The roll-out of vaccines this month to combat the coronavirus pandemic will not quickly reverse the destruction wrought on global oil demand, International Energy Agency (IEA) warned on Tuesday.
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“The understandable euphoria around the start of vaccination program partly explains higher prices but it will be several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand,” the IEA said in its monthly report.
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“In the meantime, the end of year holiday season will soon be upon us with the risk of another surge in COVID-19 cases and the possibility of yet more confinement measures.”
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The IEA trimmed its global oil demand forecasts also as the massive coronavirus pandemic hit to the aviation industry will likely be worse than expected next year.
The Paris-based watchdog revised down its estimates for oil demand this year by 50,000 barrels per day (bpd) and for next year by 170,000 bpd, citing scarce jet fuel use as fewer people travel by air.
Europe accounts for much of the backslide, with demand set to be lower in the fourth quarter compared with the third due to renewed lockdown measures.
Global oil stocks, which have mounted as consumption faltered during the pandemic, will finally reach a deficit compared to pre-crisis levels at the end of 2019 by July, the IEA added.
Aviation fuel demand is “not expected to recover quickly, as governments intend to keep in place border closures and travel restrictions until a vaccine is widely available.”
“In 2021, demand for both gasoline and diesel is projected to return to 97-99 percent of their 2019 levels,” it added.
The IEA noted that on the supply side, OPEC and allied oil producers, principally Russia, had agreed to slowly increase output earlier this month but all recognized that the market remained fragile and required careful management.
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