Energy Preview: IEA Trims Global Crude Oil Demand Growth Estimate For 2022

17 Mar 2022 , 09:13 AM

The International Energy Agency (IEA) noted in a latest monthly update that surging commodity prices and international sanctions levied against Russia following its invasion of Ukraine are expected to appreciably depress global economic growth. As a result, it revised down forecast for world oil demand by 1.3 mb/d for 2Q22-4Q22, resulting in 950 kb/d slower growth for 2022 on average. Total demand is now projected at 99.7 mb/d in 2022, an increase of 2.1 mb/d from 2021. This marks a downgrade of around 1 mb/d from its previous forecast.

The prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock. IEA estimates that from April, 3 mb/d of Russian oil output could be shut in as sanctions take hold and buyers shun exports. OPEC+ is, for now, sticking to its agreement to increase supply by modest monthly amounts. Only Saudi Arabia and the UAE hold substantial spare capacity that could immediately help to offset a Russian shortfall.

Global refinery throughput estimates for 2022 have been revised down by 860 kb/d since last month’s Report as a 1.1 mb/d reduction in Russian runs is not expected to be fully offset by increases elsewhere. In 2022, refinery intake globally is projected to rise by 2.9 mb/d year-on-year to 80.8 mb/d. Despite a downgrade to demand, product markets remain tight with further stock draws expected throughout the year.

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