Global oil demand will increase by 6.3 million barrels per day (bpd), or 7%, in 2021 to average 96.7 million bpd following the unprecedented oil demand shock from the Covid-19 pandemic last year, consultancy Wood Mackenzie said on Thursday.
The research agency stressed three key factors upon which oil markets and the refining sector hinge in 2021 – OPEC+ production, COVID-19 developments, and the energy transition.
“Our short-term forecast assumes vaccine distribution accelerating through 2021 and is underpinned by 5.0% expected growth in global GDP, according to our macroeconomic outlook, following the global economy’s 5.4% contraction last year,” Ann-Louise Hittle, Wood Mackenzie’s vice president was quoted in the statement.
She said the pace and strength of the global liquids demand recovery would depend on the pace of COVID-19 vaccine distribution and a worldwide economic recovery.
On the supply side, all eyes will be on OPEC+’s plan to ease production restraint, said WoodMac, recalling that the group’s massive productions cuts eased more with Saudi Arabia’s voluntary reduction in February and March.
“We are assuming output gradually rises from April as the group obtains the planned 5.8 million bpd restraint level by the third quarter of 2021. But OPEC+ decisions are a huge uncertainty for this year. Can OPEC+ negotiate deals each month and remain committed to production restraint? Some production restraint is needed in 2021 for market balance, but compliance could wane with demand recovery,” Hittle said.
Even with demand projected to strongly increase, WoodMac said 2021 refinery utilization would remain low.
By Sibel Morrow and Firdevs Yuksel