Vaccination roll-out will not immediately reverse oil demand destruction, IEA warns

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The International Energy Agency (IEA) on Tuesday warned that the roll-out of the coronavirus vaccine will not have an immediate impact on the destruction on global demand for oil.

“The understandable euphoria around the start of vaccination programmes partly explains higher prices but it will be several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand,” the IEA said in its monthly report.

In fact, IEA said the holiday season presents another opportunity for a surge in COVID-19 cases and this can lead to more confinement measures, further impacting oil demand.

The Agency revised down its estimates for oil demand this year by 50,000 barrels per day (bpd) and for next year by 170,000 bpd, citing scarce jet fuel use as fewer people travel by air.

By the end of this month Guyana’s production at its first offshore development – Liza Phase 1 – is expected to hit peak output of 120,000 barrels of oil per day. The country’s output will ramp up to over 500,000 bpd by 2024 when two other projects – Liza Phase 2 and Payara – come on stream.

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