S&P GLOBAL PLATTS | What’s happening? The global oil market is set to tighten next year with demand recovering from the coronavirus pandemic at a faster pace than supply, according to the International Energy Agency, giving OPEC and its producer allies scope to unwind their agreed-upon output cuts faster than expected. Global oil demand will grow 4 million b/d more than supply next year, which would mean shifting some of the huge oil stock overhang that has built up during the pandemic, the IEA said in its latest monthly oil market report released June 16.
What’s next? On the demand side, markets are closely monitoring the pace of the oil demand recovery and the potential for a second-wave of COVD-19 infections to flatten the demand recovery curve, pushing its tail end well into 2021 and perhaps beyond. On supply, OPEC+ efforts to clamp down on quota busting by some of its members, such as Iraq and Kazakhstan, is key to the full implementation of the producer group’s massive 9.7 million b/d of output cuts to the end of July. Any slowdown in oil demand recovery could trigger OPEC+ to consider ending the cuts beyond July.
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