Petchems crude oil demand to slow in 2022 as non-OPEC production surges – IEA
LONDON (ICIS) – Global crude oil demand for petrochemicals will remain strong in 2021, but will slow significantly in 2022, the International Energy Agency (IEA) said on Friday.
Supply, in any case, should match demand, as many crude oil producers would be able to increase production in a relatively short period of time.
Demand for crude oil will exceed pre-2019 pandemic levels by the end of 2022, the IEA said, with all supply growth expected to come from non-OPEC countries, the United States. United and Canada in the lead.
The Saudi Arabia-led crude oil cartel will produce around 2 million barrels per day by the end of 2022 less than before the pandemic, according to IEA estimates.
The global petrochemical industry’s windfall from a surge in demand for all types of packaging and medical devices is expected to end as the pandemic is brought under control and consumers spend more on experiences rather than goods .
“Petrochemical demand was relatively spared by the COVID crisis in 2020, with the need for medical equipment and packaging compensating for[s] a drop in demand in the manufacturing sector [in the initial stages of the
pandemic]”said the IEA.
“Demand is expected to remain strong in 2021, but growth is expected to slow in 2022. The United States and China are leading the expansion of the petrochemical industry.
The slowdown in petrochemical activity suggests that global demand for naphtha, a key petrochemical feedstock, is expected to stagnate in 2022.
Q4 2022: REACHING PRE-PANDEMIC LEVELS
The IEA expects crude oil demand to rebound from 5.4 million barrels / day in 2021 to 96.39 million barrels / day.
Demand fell from an all-time low of 8.6 million barrels / day in 2020, ending the year at 91.03 million barrels / day.
Demand will increase by a further 3.1 million barrels / day in 2022, with an average of 99.5 million barrels / day. It will be in the fourth quarter of 2022 when demand reaches pre-pandemic levels, the IEA said, at 100.6 million barrels per day.
Demand in 2019, the last full year before the pandemic began, was 99.67 million barrels per day.
In 2022, aviation is expected to recover, after being hit by pandemic-induced travel restrictions, but this recovery will be subject to pandemic control on a global scale, the IEA added.
“By the end of 2022, [overall] demand is expected to exceed pre-COVID levels. The recovery will be uneven not only between regions but also between sectors and products. While the end of the pandemic is in sight in advanced economies, slow vaccine distribution could further jeopardize recovery in non-OECD countries, ”the IEA said.
“The aviation sector will be the slowest to recover, as some travel restrictions will likely remain in place until the pandemic is firmly under control. Demand for gasoline is also expected to lag behind pre-COVID levels, as continued telecommuting practices and a growing share of electric and more efficient vehicles offset increased mobility. ”
The increase in demand will be accompanied by an increase in supply which will support non-OPEC producers, according to the IEA. He expects the United States, Canada, Brazil or Norway to be among the producers who benefit the most.
However, OPEC +, the Saudi-Russian-led group representing non-cartel but allied countries, will need to “turn on the taps” to keep the world well supplied.
OPEC + made voluntary cuts in its production to rebalance the market after the sharp rise in stocks in 2020.
“Meeting the expected growth in demand will probably not be a problem… Even after increasing oil production by around 2 million barrels / day over the period May-July, OPEC + will have 6.9 million barrels / day of effective reserve capacity. If sanctions against Iran are lifted, an additional 1.4 million barrels per day could be brought to market in a relatively short time, ”the IEA said.
The United States is reportedly considering lifting the sanctions on Iran as part of a renewed nuclear deal, which would allow the Middle East power plant to return to the global market.
“Regarding producers outside the alliance, production growth should accelerate from 700,000 barrels / day in 2021 to 1.6 million barrels / day next year,” he said. added.
“This leaves non-OPEC + production well above 2019 levels. On the other hand, even if OPEC + producers closed the gap created by the growth in demand, the block’s production would still be more than 2% lower. million barrels per day than the 2019 average. ”
Front page photo: A traveler at Brussels Airport in May; aviation sector would recover in 2022 if pandemic were ‘firmly’ under global control, IEA said
Photo source: Frédéric Sierakowski / Isopix / Shutterstock