By Scott Kanowsky
Investing.com -- The International Energy Agency has lowered its forecast for global oil demand in 2022, citing the impact of Covid-19 restrictions in China and sputtering growth in rich world countries.
The IEA said in its monthly report that it expects worldwide oil demand to rise by 2M barrels per day this year, down marginally from its previous estimate of 2.1M b/d.
"For now, a deteriorating economic environment and recurring Covid lockdowns in China continue to weigh on market sentiment," the IEA said.
Meanwhile, more oil is hitting the market, the organization added. Total output grew to 101.3M b/d in August, up by more than 5M b/d annually, as gains in key producers like Libya, Saudi Arabia, and the UAE offset losses in Nigeria and Kazakhstan.
Production in Russia has also remained resilient despite the impact of Western sanctions following the outbreak of the war in Ukraine, with oil and crude shipments to India, China and Turkey helping balance a drop in exports to Europe, the U.S., Japan, and Korea. However, the IEA predicted that an upcoming ban on Russia imports by the European Union later this year will cause the country's oil production to fall by 1.9M b/d by February 2023.
The IEA said that, even when accounting for these expected losses, the oil market will likely be oversupplied in the second half of 2022 by around 1M b/d and "roughly balanced" next year.