Home Europe News IEA: Uncertain oil market after rebounding from Covid-19's historic global demand decline

IEA: Uncertain oil market after rebounding from Covid-19’s historic global demand decline

The International Energy Agency’s new 2021 Oil Report shows that the COVID-19 pandemic has caused a historic drop in global oil demand, but not necessarily a prolonged pandemic. IEA executive director Fatih Birol said on March 17, adding that achieving an orderly transition from oil requires governments to take major policy actions as well as speed up behavior change.

According to a new IEA report, the world oil market has recovered from the massive demand shock caused by Covid-19 but still faces a high level of uncertainty that is challenging the industry. time is over.

The forecast for global oil demand has declined and demand could peak earlier than previously thought if governments’ increasing focus on clean energy translates into stronger policies and The behavioral changes caused by the pandemic become more profound, according to Oil 2021, the latest IEA information reports the medium-term market annually. But in the report’s base case, which reflects current policy settings, oil demand is expected to increase to 104 million bpd by 2026, a 4% increase from 2019 levels. “ The COVID-19 crisis has caused a historic drop in global oil demand – but not necessarily a permanent one. Achieving an orderly transition from oil is essential to meeting climate goals, but it will require major policy changes from governments as well as rapid behavioral changes. Without that, global oil demand will increase annually from now until 2026, ”said Birol. “For the world’s oil demand to peak anytime soon, critical action is needed immediately to improve fuel-efficiency standards, boost electric vehicle sales and limit oil use in energy industry. “

Those actions – combined with increased remote work, more recycling and reduced workload – could reduce oil use by up to 5.6 million barrels per day by 2026, which means global oil demand will never return as it did before the pandemic.

Asia will continue to dominate growth in global oil demand, accounting for 90% of the increase from 2019 to 2026 in the base case of the IEA report. In contrast, demand in many advanced economies, where vehicle ownership and per capita oil use are much higher, is not expected to return to pre-crisis levels.

On the supply side, increased uncertainty about the prospects has created a dilemma for manufacturers. The investment decisions made today can result in too much of the capacity being left behind or too little oil to meet demand. There has been only a slight increase in global upstream investment this year after operators spent a third less in 2020 than planned at the beginning of the year.

In the IEA report, the world’s oil production capacity is projected to increase by 5 million barrels a day by 2026. At the same time, the historic decline in demand has led to an increase in production capacity. provision to a record 9 million barrels / day. can keep global markets comfortable in the short term.

To meet oil demand growth to 2026 in the base case of the IEA report, supply needs to increase by 10 million barrels per day by 2026. The Middle East, led by Saudi Arabia, is expected Will provide half of that increase, largely due to the current close. -in capacity. The region’s expanding market share will mark a drastic change from recent years as the United States dominates growth. Based on today’s policy settings, US supply growth is set to continue as investment and activity levels rise, but any increase cannot match the highest seen in Lately year.

“No oil and gas company is unaffected by the clean energy transition, so every sector in the industry needs to consider how to respond to the rising momentum behind the net emissions incentive,” Birol said. zero of the world ”. “Reducing emissions from their core operations, especially methane, is an urgent priority. In addition, there are technologies critical to energy transitions that may match the oil and gas company’s capabilities, such as carbon capture, low carbon hydrogen, biofuels, and offshore wind. In many cases, they can help with carbon removal in areas where emissions are most difficult to deal with. It is encouraging to see some oil and gas companies expanding their commitments in these areas, but more needs to be done, ”he added.

The global refining industry is grappling with overcapacity. A shutdown of at least 6 million barrels per day will be required to allow usage rates to return to normal levels. Meanwhile, China, the Middle East and India continue to drive new capacity growth.

Aviation fuel demand, the region most affected by the pandemic, is expected to gradually return to pre-crisis levels. But the shift to online meetings and conferences – coupled with persistent corporate efforts to cut costs and some people’s hesitancy to continue leisure travel – may change. permanently change travel trends.

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