Oil to Stage Rocky 2022 Demand Recovery

Oil demand is still recovering from the Covid-19 pandemic amid what could prove the quickest economic rebound in history. In 2022, global oil consumption will gain 3 million barrels per day year on year and reach 100.4 million b/d, finally breaking through 100 million b/d for the first time since 2019, according to Energy Intelligence figures. Most of the advanced G7 economies will generate GDP growth in excess of 3% next year, with commensurate levels of inflation. China remains a crucial part of demand growth, but the country is now exposed to a severe crisis in its construction and property sectors, the downfall of which may spread to other Northeast Asian economies. The new Omicron variant is a risk globally. If Covid-19 no longer represents a deadly threat in developed economies, it still is one in emerging markets, particularly in middle-income countries where vaccination programs are lagging like Indonesia, Iraq, the Philippines or South Africa. As a result, the return to normality in 2022 will not be trouble-free. First, it coincides with several central banks considering somewhat tighter monetary policy. Second, the uneven energy transition and recent higher energy prices will impact markets. This is already the case in Central and Eastern European countries, which are used to elevated energy prices, but also in energy price-sensitive countries like India, Pakistan or Turkey.