4 months ago • 2 mins
What’s going on here?
The world’s craving for oil hit a new peak, according to a report out on Friday.
What does this mean?
The pandemic once had some folk thinking that oil consumption was only set to go one way, what with remote work on the rise and governments lauding the imminent green transition. But three years on, that’s starting to look like a whole lot of hokum and wishful thinking. See, despite mounting evidence of climate change, our thirst for oil hasn’t waned – it’s actually grown. The International Energy Agency (IEA) just revealed that the world guzzled an average of 103 million barrels a day in June, a new all-time record. You can thank summer air travel, increased oil use in power generation, and China’s bustling activity for that. And hold onto your hats, because August might see even higher numbers.
Why should I care?
For markets: Slick, but slim pickings.
While demand’s skyrocketing, supply’s playing hard to get. OPEC+’s been slashing supplies to prop up oil prices. In fact, its output dipped close to a two-year low last month, and the group’s still hinting at more cuts to come. Combine that with the fact that oil stocks in developed countries are dwindling below their five-year average, and it’s no wonder oil prices soared to a six-month high this week. If this keeps up, we might be bracing for another inflation surge, just when we thought energy prices were under control.
The bigger picture: Green gears grinding slowly.
This oil consumption might have you wondering how the energy transition is faring. And come next year, we could see its real impact kick in – but don’t expect a revolution. After all, the IEA predicts that demand growth will halve as more electric vehicles hit the roads and cars get more fuel-efficient. That’s a start, but it’s also a reminder the green wave will creep in slowly rather than all at once.
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