Demand for oil will surpass pre-pandemic levels by the end of next year as the global economy recovers, the International Energy Agency said on Friday, rejecting analysts’ predictions that the world’s oil usage has already peaked.
“Global oil demand is set to return to pre-pandemic levels by the end of 2022,” the IEA said in its monthly oil market report, predicting that demand will rise by 5.4 million barrels per day this year and an additional 3.1 million barrels next year to an average of 99.5 million barrels per day in 2022.
Oil demand plunged by a record 8.6 million barrels per day in 2020 as coronavirus lockdowns and travel bans destroyed demand.
Faced with this collapse, petroleum giant BP said in a September report that the world had reached “peak oil,” meaning that oil usage would never return to pre-pandemic levels. And in December, Bloomberg News declared, “Peak Oil Is Suddenly Upon Us.”
But the Paris-based IEA, which is an intergovernmental organization that includes the US, European Union and Japan, believes proponents of the peak oil theory spoke too soon.
In the coming years, global demand for plastics will boost sales of petrochemicals, while the recovery of the travel sector will increase jet fuel usage, the IEA said.
However, the increasing popularity of remote work and the rise of electric and fuel-efficient vehicles will suppress some demand for gasoline, according to the organization.
In addition, the lopsided global distribution of vaccines toward wealthy countries means that oil demand in poorer countries will recover more slowly, the IEA predicted.
Despite these trends, the group insisted that demand should surpass pre-COVID levels by the end of 2022.
“The recovery will be uneven not only amongst regions but across sectors and products,” said the IEA, which is led by Turkish energy economist Fatih Birol.
The IEA said that meeting growing global oil demand is “unlikely to be a problem” due to increased production by OPEC+ countries like Saudi Arabia, as well as further output by the US, Canada, Brazil and Norway.
If sanctions on Iran were lifted, an additional 1.4 million barrels per day would hit the global oil market, the IEA said.
In May, US gas prices hit a seven-year high as the Colonial Pipeline hack shut down America’s largest pipeline.