Opec expects oil demand for 2022 to exceed pre-pandemic levels, reaching 100.8 million barrels per day as the crude exporting group sees strong economic recovery on the back of widespread inoculation efforts.
“Ongoing improvements in vaccination rates and a potential increase in public confidence in managing Covid-19 is anticipated to be more widespread in 2022, further supporting the recovery of oil demand,” particularly transport fuels, Opec said in its latest monthly market report.
The group also revised upwards its estimated demand growth for 2022, up by 900,000 bpd to 4.2 million bpd amid expectations of higher levels of economic activity and fewer movement restrictions.
“As vaccination rates rise, the Covid-19 pandemic is expected to be better managed, and economic activities and mobility will firmly return to pre-Covid-19 levels,” the Vienna-based group said.
For 2021, Opec revised its demand growth estimates for the fourth quarter - lower by 120,000 bpd - over concerns about the Delta variant's impact on energy demand. The Delta variant of coronavirus, which originated in India, is a particularly virulent strain that has been responsible for a surge in infections across the world.
The group left overall demand growth in 2021 unchanged at 6 million bpd. Global consumption this year is expected to hit 96.7 million bpd.
“An upwards revision due to positive mobility indicators for OECD [Organisation for Economic Co-operation and Development] countries in 3Q21 was offset by a downwards revision to 4Q21, given the risk to oil demand fundamentals stemming from the increase in Covid-19 cases, primarily related to the Delta variant,” the report said.
Global cases of Covid-19 are now above 225 million, with more than 4.6 million deaths registered as of Monday, pandemic-tracking site Worldometer reported.
Demand centres for crude such as the US, India and Brazil continue to lead in terms of total numbers of infections.
Opec, alongside non-members led by Russia, is set to convene for a ministerial meeting on October 1 to discuss its supply pact.
Opec+, as the supergroup is known, will bring 2 million bpd back to the markets by the end of the year. The group is set to decide whether to bring an additional 400,000 bpd of supply in October.
Oil prices rose during the opening session on Monday. Brent, the international benchmark for crude, rose 0.69 per cent to trade at $73.42 per barrel at 4.06pm UAE time. West Texas Intermediate, which tracks US crude grades, was up 0.79 per cent at $70.27 per barrel.
Separately, Bank of America estimated that oil prices could hit $100 per barrel by the middle of next year if the Northern Hemisphere winter turns out to be colder than usual.
“Global oil demand could surge by 1 million to 2 million bpd. Under this scenario, the oil market deficit this winter could easily exceed 2 million bpd and our $100 per barrel oil target for the middle of next year could quickly be rolled forward six months,” the bank said in a report on Monday.
The US bank sees Brent remaining “rangebound” in the second half of the year. The crude benchmark could hit $75 per barrel by year-end if the markets are not swayed by upside risks.
“A new Covid-19 wave, taper tantrum, a China debt crisis and the return of Iranian crude barrels could push oil lower,” the report cautioned.