Global oil demand could decline marginally in the first quarter of 2021, as many regions, including many European countries, re-introduce mobility restrictions, the global rating agency Fitch Ratings said on Friday.
The agency said the OPEC+ oil production policies and the pandemic's path would continue to drive global oil prices in 2021.
“Although demand remains subdued because of the coronavirus pandemic, oil prices have increased materially since October 2020 due to OPEC+ production cuts, reduced oil inventories and increased investor optimism, supported by the vaccine roll-out in many countries,” it said.
However, the agency warned that oil prices could still come under pressure, particularly in the first half of 2021 “before effective vaccination programs are fully underway.”
“The positive effects of vaccination programs on the oil demand recovery may not be visible for several months until a critical mass of population is inoculated,” Fitch said, adding that mass vaccination is likely to lead to a sustainable improvement in oil demand, although there is some uncertainty about the effectiveness of the vaccines against the most recent virus mutations.
By Sibel Morrow