The International Energy Agency (IEA) is forecasting that global oil demand won’t return to pre-pandemic levels until 2023.
The IEA also said that it expects oil demand to slow beyond 2023 due to persistent work from home arrangements, an increasing shift away from fossil fuels, and the rise of electric vehicles.
Fuel consumption is forecast to average just over 101 million barrels of oil a day in 2023, fully recouping the nine million barrels a day lost last year when lockdowns emptied roads and grounded flights, the IEA said in a new report.
But as trends like remote working endure, and as governments seek to limit climate change, oil consumption will trend lower. Oil demand in the middle of this decade will be about 2.5 million barrels lower than the IEA projected just last year.
"Oil demand will likely never catch up with its pre-pandemic trajectory," the Paris, France-based IEA said in its annual medium-term outlook. "There may be no return to ‘normal’ for the oil market in the post-COVID era."
Crude oil prices have already reversed last year’s plunge, rising to almost $70 U.S. a barrel. It’s partly because demand in Asia has held up, but mostly as a result of vast production cuts by the OPEC+ alliance led by Saudi Arabia.
Following a vigorous recovery in global oil demand this year and next in tandem with the wider economy, the IEA forecasts that growth in oil consumption will slow, reaching 104.1 million barrels a day by 2026.
Asia will account for 90% of the future oil growth, and much of it will be from petrochemicals and aviation fuel, the IEA said. With electric vehicles becoming more widespread and internal combustion engines more efficient, demand for gasoline should stagnate by mid-decade.
