IEA Cuts Global Oil Demand Outlook

IEA Cuts Global Oil Demand Outlook

over 3 years ago2 mins

Call the International Energy Agency (IEA) crazy, but it doesn’t think the recently announced vaccine will work on the oil industry: it cut its forecast for global oil demand on Thursday 🦠

What does this mean?

Oil’s price has been rising since Pfizer and BioNTech reported the success of their coronavirus vaccine trial earlier this week, reinvigorating hopes for an uptick in demand. But the IEA has been quick to poop on that particular party, saying it doesn’t expect demand to rise in any significant way till late 2021.

Virus resurgence slashes oil demand forecasts with no boost yet from improved vaccine hopes
Source: Bloomberg

The IEA report came the day after OPEC – an alliance between the world’s most powerful oil-producing nations – lowered its outlook for next year, even after the group cut production a few months ago in an effort to stabilize prices 🛢 It’s now expected to gradually ramp up production again, and it’ll meet at the end of this month to work out how best to go about it.

Why should I care?

Big oil companies have more than just lower demand to deal with: the US president-elect’s green energy plan is also a threat to the dusky nectar ♻️ Even so, the prospect of the country’s most progressive climate strategy in history doesn’t seem to have fazed industry bigshots, who think the newcomer’s ambitious plans are likely to be toned down – if not blocked altogether.

A lack of demand isn’t just punishing the oil industry: the UK said on Thursday that its economy is still almost 10% smaller than it was before the pandemic, even though last quarter saw the country’s biggest growth ever 🇬🇧 To add insult to injury, its recovery is trailing behind its G7 buddies, while new lockdown measures could be about to push the country back into recession. At least the UK’s central bank was prepared for this: it pumped more money into the economy last week to keep it from going into freefall.

UK, monthly index and quarterly average, January to September 2020
Source: ONS
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