The Omicron variant will dent global oil requirements but not derail the recovery in demand, the International Energy Agency said.
The IEA trimmed its forecast for oil demand by 100,000 barrels per day for 2021 and 2022, mainly due to travel restrictions affecting demand for jet fuel.
The agency predicted Omicron would have a less severe effect on demand than earlier strains or Covid-19 because containment measures are less severe. So far, governments have not imposed severe restraints on air travel with large swathes of populations vaccinated against the virus.
“The surge in new Covid-19 cases is expected to temporarily slow, but not upend, the recovery in oil demand that is underway,” the IEA said in its monthly report. “New containment measures put in place to halt the spread of the virus are likely to have a more muted impact on the economy versus previous Covid waves.”
The agency said there could be a short-term oil glut in early 2022 as output exceeds demand. The market could face a temporary oversupply as major producers pump more oil and Omicron temporarily hits demand, it said.