IEA demand revision points to tighter oil market

Oil barrels

The International Energy Agency’s (IEA) upward revision in historical oil demand in its monthly report indicates a tighter global market than previously estimated.

“We believe the tighter balance for 2021 and 2022 is already reflected in the price of oil and the forward curve,” the IEA told Reuters.

On Friday, the agency revised up its baseline estimate of global demand by nearly 800,000 barrels per day (bpd).

However, the Paris-based IEA did not alter its outlook on the pace of economic recovery; the bump in historical assumptions means 2021 demand outstripped supply by 2.1 million bpd.

The change also indicates oil demand just about recovered to a pre-pandemic high of 100.3 million bpd in the fourth quarter of 2021, closer than in the previous forecast.

A full demand rebound remains expected in the third quarter of 2022, the report noted.