By the end of 2022, oil demand should exceed 2019 levels, according to both the International Energy Agency (IEA) and the Energy Information Administration (EIA).
On Friday, the IEA came out with its June Oil Market Report in which it predicts global oil demand will grow by 5.4m barrels per day in 2021 and rise a further 3.1m barrels per day in 2022. At the end of next year, the IEA expects oil demand to be back at pre-pandemic levels. The products that were hit the hardest by the virus, jet fuel and gasoline, will see the largest increases. The EIA has the same global demand growth forecast for 2021 but is slightly more optimistic for 2022 (+3.6m barrels per day).
Looking at what these projections mean for the tanker market, Poten & Partners suggested in its latest weekly report that this year the focus will be more on a rebound in demand from OECD countries, which have access to more short-haul supplies, something that converts to lower ton-mile demand growth. However, in 2022, Poten suggested the demand focus will switch back to non-OECD countries, and, at the same time, non-OPEC production growth will accelerate, something that bodes well for ton-mile demand growth.
Product tankers will also benefit with Poten suggesting: “More refined product demand will lead to higher refinery runs as well as product inventory drawdowns. Both could lead to more transportation demand and benefit product tankers in the short-term. Expansion of refinery capacity in non-OECD countries, combined with closures or conversions to bio-refineries elsewhere are long-term drivers.”