IEA downgrades global oil demand amid resurgence of Covid-19

The International Energy Agency (IEA) has trimmed its outlook for global oil demand in 2021, citing the rapidly spreading Delta variant of the coronavirus and its impact on the world’s economy.

In a report published on Thursday, the Paris-based organization stated that global demand for oil reversed course in July due to the surge in cases of the Covid-19 Delta variant, and is now set to continue at a slower pace for the remainder of the year.

“Growth for the second half of 2021 has been downgraded more sharply, as new COVID-19 restrictions imposed in several major oil consuming countries, particularly in Asia, look set to reduce mobility and oil use,” IEA said in its oil report for July.

The IEA cut its global oil demand growth forecast by 100,000 barrels a day for 2021, predicting it will be half a million barrels per day lower in the second half of the year compared to June estimates.

“We now estimate that demand fell in July as the rapid spread of the COVID-19 Delta variant undermined deliveries in China, Indonesia and other parts of Asia,” the report specified.

However, the agency upgraded next year’s oil demand forecast by 200,000 barrels a day, predicting it to settle at pre-pandemic highs in the second half of 2022 if the Organization of the Petroleum Exporting Countries (OPEC) alliance proceeds with its current plan to ramp up oil output.

OPEC and allied oil producers initially introduced oil output curbs to support prices and ease oversupply during the peak of the pandemic in 2020, removing some 10 million barrels a day from the market last year. In July, they agreed to step up production due to rising demand.

For more stories on economy & finance visit RT's business section