Delta Variant Dents Oil Demand Recovery

Delta Variant Dents Oil Demand Recovery
The economic impact of the Covid-19 Delta variant and rebounding output mean that expectations of global oil demand outstripping supply are fading, the IEA and OPEC said Thursday. In its closely watched monthly market report, the International Energy Agency said that the worsening of the pandemic, as well as revisions to historical data, mean its global oil demand outlook has been “appreciably downgraded,” with some of this year’s forecast recovery shifted to 2022. Investors have become concerned about falling commodities demand in China, where Beijing authorities last week canceled all large-scale exhibitions and events for the remainder of August. That, and other measures aimed at slowing the spread of the Delta variant, has in recent days spooked traders who were already worried about the fragile nature of China’s economic recovery. The IEA cut its 2021 global oil demand growth forecast by 100,000 barrels a day, while upgrading its 2022 forecast by 200,000 barrels a day. Both the IEA and OPEC expect the world’s thirst for oil to return to pre-pandemic highs in the second half of next year. The Paris-based IEA said the timing of the variant’s spread has coincided with planned supply increases from the Organization of the Petroleum Exporting Countries and its allies “stamping out lingering suggestions of a near-term supply crunch or supercycle.” OPEC, in its own report, significantly upgraded supplygrowth estimates for its noncartel counterparts for both 2021 and 2022. The Viennabased cartel raised its 2022 supply-growth forecast by 840,000 barrels a day to 2.9 million barrels a day. While OPEC expects Russia to increase its production by a million barrels a day next year, it said “the U.S., with year-onyear growth of 0.8 million barrels a day, together with Brazil, Norway, Canada and Guyana, will be the other key drivers.” Oil prices suffered a blow Wednesday, after the White House urged OPEC to boost oil production, saying planned increases are insufficient to fuel the post-pandemic economic recovery. The remarks came as the U.S. tries to tamp down rising consumer prices, particularly that of gasoline. Crude prices edged lower Thursday, with Brent crude oil—the global benchmark— falling 0.2% to $71.31 a barrel and West Texas Intermediate futures, the U.S. gauge, dropping 0.2% to $69.09 a barrel. U.S. crude is down 6.6% this month, with the price rally seen in much of 2021 foundering, largely due to worries about the Delta variant. Despite remarks Wednesday from National Security adviser Jake Sullivan suggesting OPEC+ should pump more oil, global demand may not keep up with the supply already expected next year if OPEC and its allies continue plans to unwind production cuts, the IEA said. Analysts have reacted to the White House’s remarks on OPEC production with skepticism and suggest it is unlikely the cartel will accelerate the pace at which it will relax production cuts. “There will be quite a lot of reluctance from the Saudis and the broader group to increase output further, particularly given continued uncertainty over the spread of the Delta variant,” said Warren Patterson, head of commodities strategy at Dutch bank ING.
Aug 15, 2021 11:50
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The section of oil, gas and petro-chemistry is the up-most and first industrial vantage of the country and the pivot of the Economy of Iran. Regarding the importance of this section and the need for coordinating and organizing the most active people in the field of production and exporting oil ,gas, and petrochemical products ,some forethoughtful and job- makers in the private section of the country decided to come together to fight against the threats by using the opportunity of mass intelligence and potentials.