Last Tuesday, the International Energy Agency (IEA) expressed that the resurgence of the COVID-19 epidemic and new anti-epidemic blockade measures are restraining oil consumption and slowing the pace of recovery in demand.

In its monthly oil market report, the IEA cut its forecast for oil demand growth in 2021 by 280,000 barrels a day to 5.5 million barrels a day. Much of the gloomier outlook came at the start of this year, when the IEA cut its forecast for oil demand in the first quarter by 600,000 barrels a day and in the second quarter by 300,000 barrels a day.

The IEA showed that while global COVID-19 vaccination efforts are progressing and restrictions on movement that hit oil demand in 2020 are expected to end, in some countries a surge in infections has forced governments to resume blockades, delaying the expected recovery in demand. Policies such as border closures, social isolation measures and blockades will continue to depress fuel demand until the vaccine is more widely distributed, which is most likely not to happen until the second half of the year. Cold weather in Asia and Europe in January can only partially offset the impact of tighter policies on oil demand.

The IEA said demand, which had been recovering steadily through 2020, slowed significantly in November and reversed in December as the more infectious strain of novel coronavirus was detected, and the number of cases rose as cold weather in the northern hemisphere coincided. The IEA also extended the decline in global oil demand for the fourth quarter of 2020 by 200,000 barrels a day, implying a drop of 6.4 million barrels a day for the quarter.