• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 4 days The United States produced more crude oil than any nation, at any time.
  • 3 days How Far Have We Really Gotten With Alternative Energy
  • 2 days Bad news for e-cars keeps coming
  • 3 days China deletes leaked stats showing plunging birth rate for 2023
  • 5 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

No One Knows What’s Next For Oil Demand

  • OPEC, the IEA, and the EIA all have different opinions on where oil demand may be heading in the immediate future. 
  • The three groups do have one commonality in their forecasts, however; COVID-19 will remain a driving force. 
  • Despite the differences in exact expectations, the three organizations remain generally optimistic about oil demand. 

The last two weeks saw three major energy organizations release their outlooks for the immediate future of oil demand. While sometimes these outlooks largely align in their projections on demand, this time, as sometimes happens, they diverged.

The three organizations are OPEC, the International Energy Agency, and the U.S. Energy Information Administration.

OPEC was first. The cartel released its latest Monthly Oil Market Report last week, expecting a mild effect of the Omicron variant of the coronavirus on oil demand and therefore leaving its demand projections for this year and next unchanged. This stands at a growth of 4.2 million bpd in 2022 from this year.

The group cited “improved COVID-19 management and rising vaccination rates, enabling economic activity and mobility to return to pre-pandemic levels, supporting transportation fuels in particular,” as factors that would determine this growth in oil demand.

Meanwhile, the International Energy Agency said in its own Oil Market Report that the Omicron variant would slow down demand growth, adding, however, that the effect would be temporary. The agency also revised slightly down its demand projections for 2021 and 2022, by 100,000 bpd, to a growth of, respectively, 5.4 million bpd this year and 3.3 million bpd next year.

The difference between OPEC’s 4.5-million-bpd demand growth projection and the IEA’s 3.3 million bpd is quite understandable. OPEC has a vested interest in higher demand. The IEA, which has lately become more of a champion for the energy transition than an impartial energy agency, is skeptical about the future of oil demand. These biases are bound to affect calculations.

The Energy Information Administration, however, served perhaps the biggest surprise in oil demand outlooks. In the latest edition of its Short-Term Energy Outlook, the authority forecast that next year, oil demand will increase by 3.4 million barrels daily. This was a downward revision of as many as 420,000 bpd from last month’s STEO projections.

Despite the differences in exact expectations, the three organizations remain generally optimistic about oil demand, and this is perhaps what matters more than actual numbers, as appealing as these may be.

“The surge in new Covid-19 cases is expected to temporarily slow, but not upend, the recovery in oil demand that is underway,” the IEA said in its OMR. “New containment measures put in place to halt the spread of the virus are likely to have a more muted impact on the economy versus previous Covid waves, not least because of widespread vaccination campaigns. As a result, we expect demand for road transport fuels and petrochemical feedstocks to continue to post healthy growth.” 

The EIA, for its part, noted that “The potential effects of the spread of this variant are uncertain, which introduces downside risks to the global oil consumption forecast, particularly for jet fuel,” adding that “The Omicron variant has introduced additional uncertainty into oil markets for the coming months, and this uncertainty is reflected in the recent increase in oil price volatility.”

And here’s OPEC’s comment on factors driving demand trends: “The expected market balance continues to be determined by the evolution of the COVID19 pandemic, as a key factor of uncertainty, but the successful joint efforts of the DoC continue to closely monitor all developments in a timely and vigilant manner, to be able to react to rapidly changing market circumstances.,”


In other words, while on the face of the three agencies disagree about where oil demand is going, they are in complete unison about what will drive it: the pandemic. Maybe 2022 will be the last year the pandemic remains the single most important factor for oil demand as some medical experts—and JP Morgan—have suggested the Omicron variant is much milder than previous ones.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • Mamdouh Salameh on December 17 2021 said:
    No matter what forecasts OPEC+, IEA and EIA make about global oil demand and allowing for the continued presence of the pandemic, oil demand is heading upwards underpinned by a robust global economy.

    And whilst the rate of demand growth could slow slightly or even pause from time to time as a result of concerns about new variants of the corona virus, speculation and profit taking, the trend will always be upward because of population and economic growth.

    Oil demand will have to continue growing to support a growing population projected to rise from 7.9 billion today to 9.7 billion by 2050 and a global economy projected to grow in size from $91 trillion in 2021 to $245 trillion also by 2050 without oil.

    And whilst the three organizations share optimism about oil demand, their demand forecasts differ because of their conflicting motivations.

    OPEC+’s motivation is to maintain stability in the global oil market and a balance between oil supplies and demand in addition to looking after the interests of its members by supporting crude oil prices that are not detrimental to the global economy and beneficial to its members.

    The IEA’s sole motivation is to publish reports and make utterances solely intended to depress crude oil prices to the benefit of its members (mostly western members).

    The EIA, on the other hand, is known to hype about the sizes of both US shale oil production and total US oil output in an obvious attempt to depress both prices and demand and also to give the impression that all is well on the shale oil front.

    Among the three organizations, I believe OPEC+ forecasts are the most realistic.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • George Doolittle on December 17 2021 said:
    Oil supplies are clearly heading higher and perhaps in a huge way. The latest news are US LNG exports to Aruba presumably to bring back on line the once massive refining complex *of those islands.*

    British Petroleum returning to the GOM.
    Canadian exports into the USA.
    A possible GTL facility in North Dakota.
    New Mexico production still booming.
    "Mayan crude" as refined product being built out.
    The USA still being a material exporter of oil in order to keep these foreign producers of oil on line and maintaining all pricing of oil and I imagine natural gas as well in US Dollars.

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News