The International Energy Agency (IEA) has said global oil demand is projected to increase by 5.4 million barrels per day (bpd) in 2021.
According to the agency’s latest monthly report, demand for oil is also expected to increase by a further 3 million barrels per day in 2022.
Despite this, the IEA has warned that global oil markets are likely to remain volatile following a breakdown in talks between OPEC members and their non-OPEC allies. A move that has created some uncertainty.
It explained that the energy market participants were closely monitoring the prospect of a deepening supply deficit until there is clarity by the Organization of the Petroleum Exporting Countries and its oil-producing allies.
“Oil markets are likely to remain volatile until there is clarity on OPEC+ production policy. And volatility does not help ensure orderly and secure energy transitions — nor is it in the interest of either producers or consumers,” the IEA said.
The IEA cautioned that further uncertainty is brewing over the potential impact associated with new variant of COVID-19 which was likely to alter market sentiment in the coming months.
Already, international benchmark Brent crude futures traded at US$75.57 a barrel on Tuesday morning July 13, up by 0.5% for the session, while the U.S. West Texas Intermediate futures stood at $74.51, around 0.6% higher.
“While prices at these levels could increase the pace of electrification of the transport sector and help accelerate energy transitions, they could also put a drag on the economic recovery, particularly in emerging and developing countries,” the IEA warned.