IEA "Even After Vaccination Starts, It Will Be a Long Way Until Crude Oil Demand Recovers"

[Asia Economy Reporter Naju-seok] There is a forecast that next year's crude oil demand will also recover slowly. Despite the supply of COVID-19 vaccines, sluggish demand in sectors such as aviation continues, making short-term recovery difficult.

On the 15th (local time), the International Energy Agency (IEA) predicted that next year's crude oil demand will be 96.9 million barrels per day. This is an increase from this year's expected 91.2 million barrels per day, but still fails to overcome the sluggish crude oil demand caused by COVID-19.

[Image source=Yonhap News]

In this report, the IEA stated that until COVID-19 vaccines are widely administered, countries' borders will remain closed, and difficulties in the aviation industry will continue. The IEA forecasted, "Crude oil demand will remain at a low level for some time, longer than initially expected." The IEA also noted that once travel restrictions are lifted, consumers will travel, but elderly people are expected to maintain a cautious attitude. Furthermore, due to the economic shock caused by COVID-19, household budgets have tightened, and companies may refrain from overseas business trips considering cost issues.

While expressing optimism regarding COVID-19 vaccine administration, the IEA predicted, "It will take time for vaccines to be widely administered to the economically active population, and crude oil demand recovery will follow the same timeline."

Moreover, the IEA pointed out that the Christmas holiday could be a stumbling block. COVID-19 cases may increase during this period, leading to stricter social distancing measures at the end of the year and the beginning of the next year.

The IEA predicted, "A third wave of the pandemic could hit Europe and the world after the upcoming holidays," adding, "This could also be a factor that reduces crude oil demand."

Regarding the excess crude oil supply and accumulated inventories, the IEA expects that inventories will remain piled up until the end of next year.

The IEA also viewed the market situation cautiously. Regarding OPEC+ (the Organization of the Petroleum Exporting Countries (OPEC) member countries and non-OPEC coalition) deciding to increase daily crude oil production by 500,000 barrels starting next month, the IEA stated, "Careful adjustments are necessary considering that market conditions can easily deteriorate."

This content was produced with the assistance of AI translation services.