Oil demand drop set to last throughout 2021 and beyond, warns IEA | Financial Times

Oil demand drop set to last throughout 2021 and beyond, warns IEA | Financial Times:

The drop in oil demand caused by the coronavirus pandemic will endure throughout 2021 and even beyond, the International Energy Agency has said, mostly due to a slower recovery in air travel.

In its first forecast for next year, the IEA said demand would rise by 5.7m barrels a day to 97.4m b/d. This is a rebound from the expected 8.1m b/d fall in 2020, set to be the largest drop on record. But it will still put 2021’s total demand 2.4m b/d below 2019.

“We have to assume that oil demand doesn’t get back to around 100m b/d till some point in 2022,” said Neil Atkinson, head of oil markets at the IEA. “But even that assumes strong economic growth in that year and no resurgence of Covid-19, so we can’t be sure. It might well be into 2023.” 


In its monthly oil-market report, the IEA said the “dire” situation of the aviation sector was largely to blame, noting that passenger traffic this year was expected to be almost 55 per cent lower than in 2019. The industry will remain a drag beyond next year, the Paris-based body estimates. The IEA expects jet fuel demand to drop by 3m b/d in 2020 and then rebound by just 1m b/d in 2021.