Despite the gains stirred up by the news of coronavirus vaccines, the global oil demand will take another year or so to return to pre-pandemic levels—by late 2021 or early 2022, an energy expert has said.
Markit vice chairman, Daniel Yergin said his expectations for oil demand are roughly in line with the forecasts by the International Energy Agency (IEA) and OPEC, which don’t expect annual oil demand to return to the pre-COVID levels next year, despite the projected rise compared to this year’s slump.
The IEA in its monthly Oil Market Report in December noted that the continued low demand for jet fuel will account for 80 per cent of next year’s 3.1-million-bpd gap in oil demand compared to pre-pandemic levels.
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In the same vein, OPEC also revised down its oil demand projections for 2020 and 2021 in its Monthly Oil in Market Report for December. The oil cartel placed its 2021 oil demand expectation at 95.89 million bpd, down 410,000 bpd from its projection of 96.3 million bpd from November.
IHS Markit’s Yergin doesn’t see the biggest disruption on the oil market as either bringing forward or delaying peak oil demand.
“At the end of the day, it won’t have much impact on peak oil demand, which I still think will be around 2030 or so,” Yergin told Al Arabiya English during an interview.
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The Pulitzer-Prize winning energy author also discussed the U.S. shale patch and the chances of it returning to the rapid growth in production in the years just before the 2020 price crash.
“Let me give you a very simple answer, the answer is no,” Yergin told Al Arabiya English when asked if U.S. oil production could return to 1.5-million-bpd annual growth.
According to IHS Markit, shale production will stay relatively unchanged at around 11 million bpd until late 2021, before it starts rising, but it will increase at a much more moderate pace.
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“So that 1.5 million barrels per day, that two million barrels per day that was so disruptive for the oil market, that’s history,” Yergin said.
By Peace Obi