IEA increases 2021 oil demand estimate on global economic rebound data

The International Energy Agency (IEA) has sharply raised its estimate for global oil demand in 2021, after seeing ‘robust’ indicators and growing expectations of a swifter global economic recovery from the COVID-19 crisis, particularly in the US and China.

In its latest monthly oil market report, the IEA said that oil demand will grow 230,000 barrels per day (bpd) faster than previously forecast, with world oil demand now expect to expand by 5.7 million bpd in 2021 to 96.7 million bpd.

“Oil markets fundamentals look decidedly stronger,” the IEA said. “The massive overhang in global oil inventories that built up during last year’s COVID-19 demand shock is being worked off, vaccine campaigns are gathering pace and the global economy appears to be on a better footing.”

But while the economic recovery seems to be driven by the world’s two largest economies – the US and China – the agency warned that rising COVID-19 cases in Europe, India and Brazil could stall the rebound.

It also cautioned that a ramping up of oil production to meet rising demand in the coming months could put oil prices under renewed pressure. At the start of April, OPEC+ agreed to ease output cuts by more than 2 million bpd from May through July. The oil cartel also has an 6 million bpd of extra supply to meet expected demand growth.