The roll-out of vaccines this month to combat the coronavirus pandemic will not undo the destruction of global demand for oil anytime soon, the International Energy Agency (IEA) warned Tuesday.
“The understandable euphoria surrounding the start of vaccination programs partly explains the higher prices, but it will be several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand,” the IEA said in its monthly report.
“In the meantime, the end of year holidays will soon come to us with the risk of another wave of COVID-19 cases and the possibility of further incarceration measures.”
The Paris-based watchdog revised its oil demand estimates by 50,000 barrels per day (bpd) this year and by 170,000 bpd for next year, citing the scarce use of jet fuel because fewer people travel by air.
Europe is responsible for much of the slowdown, with demand in the fourth quarter expected to be lower than in the third quarter due to renewed lockdown measures.
Global oil supplies, which have risen as consumption faltered during the pandemic, will finally reach deficit by July compared to pre-crisis levels, the IEA added.