In its latest monthly oil market report, the IEA said 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 Paris-based watchdog now expects global crude oil stocks to return to pre-pandemic levels by December 2021. Slashing outlook, it said oil demand will plunge by 8.8 million bpd in 2020, a cut of 50,000 bpd from its previous forecast.
The IEA predicted a "solid recovery in demand" next year, which will recover nearly two-thirds of the amount lost in 2020. “In 2021, demand will grow by 5.7 million bpd to average 97.1 million bpd, which includes a downward revision of 170,000 bpd from its previous forecast.”
The IEA’s forecast came close on the heels of a similar downward revision made by Opec on Monday. The oil exporters group cut its oil demand forecast for this year and next lower by 300,000 barrels per day as mobility restrictions increased in the US and Europe due to a second wave of Covid-19 cases.
"The understandable euphoria around the start of vaccination programmes 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.
"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."
Global oil stocks, which have piled up 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.
The IEA also said energy investment levels around the world will decline by 20 per cent from a year ago.
According to Opec, global oil demand is set to shrink this year by around 9.8 million bpd year-on-year - compared with previous projections of 9.5 million bpd - with growth of 6.3 million bpd expected in 2021, which is also 300,000 bpd less than forecast a month ago. Overall, oil demand for this year is expected to average 90m bpd.
Total global demand next year is expected to reach 96.3 million bpd, with the transportation and industrial fuel demand to remain sluggish until 2021, according to Opec.
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