London — The International Energy Agency published its latest medium-term oil market outlook on March. 17 containing closely-watched forecasts for oil supply and demand fundamentals to 2026.
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Below are the main projections from the 'Oil 2021' report.
- The IEA is more upbeat on the oil demand recovery due to progress in rolling out COVID-19 vaccine programs, a raft of fiscal stimulus packages, and signs of strong industrial activity in China.
- After collapsing by 8.7 million b/d in 2020, the IEA estimates demand growth will rebound by 13.1 million b/d to 104.1 million b/d by 2026.
- Global oil demand, including biofuels, will recover to reach 103.2 million b/d in 2025, up from 91 million b/d in 2020 and almost 100 million b/d in 2019.
- Overall, global oil demand is now forecast to rise by 3.5 million b/d between 2019 and 2025, up from an estimate of 2.8 million b/d in October.
- IEA sees no peak oil demand under default scenario so tougher government policies needed to curb oil use.
- Warns of shrinking of global spare capacity supply cushion in the absence of more upstream spending.
- OPEC's effective spare crude production capacity will narrow to 2.4 million b/d by 2026, from 6.5 million b/d in 2020, the bulk of it in Saudi Arabia.
- The Middle East will dominate 2021-2026 supply growth picture, while US supply growth will be more modest compared to recent years.
- IEA estimates that the demand for OPEC's crude will rise from 27.3 million b/d this year to reach 30.8 million b/d in 2026.
- By 2026, total oil production will rise by 10.2 million b/d from a six-year low of 94 million b/d in 2020.
- Fragile African OPEC members to see production declines.
- Refining activity fell almost 10% to 74.4 million b/d in 2020, a level last seen in 2010, due to global lockdowns.
- Global refining shutdowns of 3.6 million b/d have already been announced, but a total of at least 6 million b/d will be needed to allow utilization rates to return to above 80%.
- The IEA expects 8.5 million b/d of new refining capacity to come online from 2020 through to 2026, the bulk of which will be in China, the Middle East and India.
- A third of oil demand growth to 2026 will be met by products bypassing the refining sector, such as NGLs and biofuels.