Oil demand recovery will take a hit from a spike in new coronavirus cases before vaccine roll-outs and stimulus measures help in the second half of the year, International Energy Agency (IEA) said on Tuesday.
“Border closures, social distancing measures and shutdowns…will continue to constrain fuel demand until vaccines are more widely distributed, most likely only by the second half of the year,” it said in its monthly report.
“This recovery mainly reflects the impact of fiscal and monetary support packages as well as the effectiveness of steps to resolve the pandemic,” the IEA said.
Noting that an improvement to global oil demand went into reverse in December, the Paris-based watchdog lowered its forecast for the first quarter by 580,000 barrels per day (bpd) and its outlook for 2021 by 300,000 bpd.
Supply and demand are on track for recovery this year, and efforts by major producers to balance the market by reining in output are helping draw down oil stocks worldwide.Given the expected increase in the second half of the year, however, “much more oil is likely to be required”.