BAKU, Azerbaijan, March 17
By Leman Zeynalova – Trend:
After a strong recovery in oil demand globally through 2022-23, oil demand in high-income economies stagnates while robust demand growth continues in developing economies in the second half of the forecast, Trend reports citing Oil 2021 Outlook of the International Energy Agency (IEA).
The fastest recovery will occur in non-OECD Asia, supported by demand in China, India and other growing economies, according to IEA.
Chinese oil demand dropped y-o-y in 1Q20 but recovered above the previous year’s levels as soon as 2Q20. Indian demand also accelerated substantially in 4Q20. Demand in Africa, the Middle East and South America, although more impacted by the Covid outbreak, will grow over the forecast period.
“OECD demand, by contrast, will stagnate from 2023, and even decline at the end of the forecast period. At this stage, oil demand will not have completely recovered from the Covid crisis, and therefore we anticipate that OECD oil demand will never return to 2019 levels. The peak in OECD demand was likely reached in 2005.
The reason for the stagnation expected post-2023 is the relatively low-demand response to economic activity, moderate economic growth, and rapid progress in transport energy efficiency. In 2026, European oil demand will be 140 kb/d lower than in 2019; North America down 670 kb/d and Asia/Oceania 270 kb/d lower. Vehicle efficiency improvements will occur in all regions and, together with higher penetration of electric cars, significantly reduce transport oil demand in the medium term. We estimate that efficiency improvements cut roughly 850 kb/d of oil demand per year while EVs displace 1 mb/d by 2026 (700 kb/d of gasoline and 300 kb/d of diesel),” said the agency.
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