London, (Business News Report)|| Oil is suffering a greater-than-expected shortage in the global market, an International Energy Agency’s (IEA) report confirmed.
“We believe the tighter balance for 2021 and 2022 is already reflected in the price of oil and the forward curve,” the IEA told Reuters.
Oil prices are approaching $100 a barrel, as demand for fuel recovers from the collapse caused by the pandemic in a rally that has driven up energy costs around the world.
Some companies were forced to reduce production, which put pressure on the liquidity of consumers.
The IEA revised up its base estimate for global demand by 800,000 barrels per day, just under 1% of the global oil market of 100 million barrels per day.
Both countries consumed more of the light oil, known as natural gas liquids, that is produced in association with gas. The IEA said the revision helped explain the historical difference between observed and implied inventory changes.
The agency did not change its expectations regarding the pace of economic recovery, but the amendment by raising the historical estimates means that the demand for 2021 exceeded the supply by 2.1 million barrels per day.
The change also indicates that oil demand almost recovered to the high level recorded before the pandemic of 100.3 million barrels per day in the fourth quarter, which is closer than previously expected.
A full recovery in demand is still expected in the third quarter of 2022.
“What the demand revision means is that some… looking at the IEA database as input for their analysis will see a tighter oil market, resulting in a different assessment how to position,” Giovanni Staunovo, commodity analyst at UBS, said.
“Emerging markets account for more than 50 percent of oil demand, where data is less transparent and their demand keeps rising faster than in OECD countries. Unsurprisingly all energy agencies have different numbers,” he added.
The crisis between Russia and Ukraine and the possibility of a war have increased oil prices around the world.
