The International Energy Agency has downgraded its supply and demand forecast for next year, citing the impact of the resurgence of COVID-19 cases on the global recovery.
- The IEA has cut down both its supply and demand forecasts from non-members of the Organization of the Petroleum Exporting Countries by 100,000 barrels a day.
- The downgrade comes as it expects the increase in COVID-19 cases to drag recovery of global demand, specifically in jet fuel due to travel restrictions.
- The IEA believes the emergence of the Omicron variant will “temporarily slow, but not upend” the recovery.
- Major consumers started to tap their oil reserves in November, driven by concerns that the global economic recovery and resurgence would push inflation higher.
- The IEA also expects OPEC+ leaders Saudi Arabia and Russia to set production records, should the group continue with its planned unwinding of production cuts.
- The higher output combined with lower demand was previously predicted to cause a 1.7 million barrel a day surplus in the first three months of 2022.