Paris (Reuters) – She said International Energy Agency Today, Thursday, the surge in oil demand abruptly reversed course, and is set to proceed at a slower pace for the rest of the year due to the spread of the mutated delta strain of Covid-19.
“Growth in the second half of 2021 has been reduced at a sharp pace, as it appears that the new restrictions to combat Covid-19 imposed in several large oil-consuming countries, especially in Asia, will reduce the mobility and use of oil,” the Paris-based agency said.
“We now estimate that demand fell in July as the rapid spread of the delta mutated strain of COVID-19 disrupted deliveries in China, Indonesia and other parts of Asia,” it said in its monthly oil report.
The agency set a drop in demand last month at 120,000 barrels per day, and expected growth in the second half of the year to be half a million barrels per day less than its estimate issued last month, noting that some of the changes are due to revisions to data.
The agency added that the production agreement reached by the OPEC + alliance last month will restore balance to the market in the short term.
And she added that the market may “tend again to record a surplus in 2022 if OPEC continues to halt the cuts and the producers who did not participate in the agreement (production) boost (production) in response to the rise in prices.”
In July, OPEC +, which imposed production restrictions with the aim of boosting prices and reducing excess supply, agreed to increase production by 400,000 barrels per day per month, starting in August, until the rest of the 5.8 million barrels per day reduction is gradually phased out.
On Wednesday, the United States called on the group to boost oil production to counter high gasoline prices and support the global economic recovery. OPEC + is scheduled to hold a meeting in early September to review the situation.
Citing a United Nations report released this week warning that climate change is spiraling out of control, the IEA said the world needed to urgently move towards a carbon-neutral world.
“The global oil industry is struggling to find new business models that are able to coexist with shifts in the energy sector… while continuing to meet sustainable demand for oil,” she added.