Global oil demand is forecast to increase 6% this year and expected to return to pre-pandemic levels by the end of 2022, the International Energy Agency (IEA) said in its monthly oil report on Friday.

The agency adjusted the demand upwards for the first half of the year, however, it revised down its estimate for the second half due to slow vaccination campaigns in non-OECD economies, the IEA.

In June, oil demand is forecast to rise by a significant 2.5 million barrels per day (bpd) month-on-month, one of the largest monthly gains recorded in the past year, it said.

Stressing that most of the increase will occur in transport fuels, such as gasoline and jet fuel in India, the US and other large oil consumers, the agency said vaccination campaigns in Europe and North America, which represent 40% of global oil demand, have supported growth.

Demand is likely to grow by a further 1.2 million bpd month-on-month in July and 1 million bpd month-on-month in August, as the Northern Hemisphere summer holiday season supports increased travel, it added.

However, the agency warned that the recent surge in COVID-19 cases in countries as varied as Argentina, Brazil, India, Malaysia and Thailand serves as a reminder that the pandemic is not over, and that further demand declines are likely in countries with low virus immunity.

In 2021, the highest consumption is forecast to be in the Asia Pacific region with 35.7 million barrels per day, followed by the Americas with 30.3 million barrels and Europe with 13.7 million barrels.

Global supply rises

The IEA said global oil supply increased by 970,000 bpd in May to 94.28 million bpd on the back of higher supply from non-OPEC+ and the monthly OPEC+ adjustment effort.

OPEC crude oil production reached 25.43 million bpd in May, recording an increase of 370,000 bpd compared to the previous month.

Non-OPEC production also saw an increase of almost 510,000 bpd to 63.51 million bpd.

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