IEA sees tighter oil market as demand withstands Omicron

IEA sees tighter oil market as demand withstands Omicron

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Bloomberg

Global oil markets look tighter than previously thought as demand suffers surprisingly little impact from the latest coronavirus strain while supplies are curbed by disruptions, the International Energy Agency (IEA) said.

The surplus facing world markets this year is shrinking, with oil demand — slightly upgraded from last month — on track to hit pre-pandemic levels of 99.7 million barrels a day, the IEA said in its monthly report. At the same time, supplies have been restricted as the Opec+ coalition struggles to revive halted output and producers elsewhere suffer a range of disruptions, thinning the margin of spare capacity.

The more bullish outlook from the Paris-based agency comes just hours after crude prices climbed to a seven-year high above $89 a barrel in London. The rally is proving a challenge for consuming nations and central banks as they try to stimulate the economic recovery while fending off an inflationary spike and cost-of-living crisis.

The IEA, which advises most major economies, raised projections for global oil demand by 200,000 barrels a day for both 2021 and 2022. Consumption will increase by 5.5 million barrels a day and 3.3