Global oil demand will take until 2023 to return to the pre-pandemic levels of 100 million bpd, but COVID-19 will change parts of consumer behavior forever with global gasoline demand likely past its peak already, the International Energy Agency (IEA) said on Wednesday in its annual Oil 2021 report with projections through 2026.
By 2026, global oil demand is expected at 104.1 million bpd, up by 4.4 million bpd compared to 2019 levels. Still, consumption in 2025 is projected 2.5 million bpd lower than the agency’s estimates from last year.
“Global oil demand, still reeling from the effects of the pandemic, is unlikely to catch up with its pre-Covid trajectory,” the IEA said in its annual report.
Although oil demand is set to grow from the crisis levels, “there may be no return to ‘normal’ for the oil market in the post-Covid era,” the Paris-based agency noted.
Gasoline demand worldwide likely saw its peak in 2019 because fuel efficiency gains and a shift to electric vehicles (EVs) “eclipse robust mobility growth in the developing world.”
Demand for jet fuel—the hardest hit segment of oil demand—will not return to 2019 levels by 2024, the IEA forecasts, adding that business travel could be forever changed, with muted demand due to the online meetings during the pandemic.
The refining sector will continue to struggle with excess capacity, and a new wave of refinery rationalization around the world is underway, said the IEA.
At least 6 million bpd of additional refinery shutdowns—on top of already announced 3.6 million bpd closures—will be necessary so that the global refining utilization rates return to normal levels of above 80 percent, the agency says.
In a separate report, the monthly Oil Market Report, the IEA quashed bulls’ hopes of a new supercycle and a looming supply crunch, saying that inventories still look ample, while OPEC+ has more than 9 million bpd of spare production capacity offline because of the cuts.
By Tsvetana Paraskova for Oilprice.com
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