The King Abdullah Petroleum Studies and Research Center (KAPSARC) has recently published KAPSARC Oil Market Outlook (KOMO) for Q1 2021, which provides a comprehensive overview of world oil markets, including supply and demand balances, crude oil inventories, and Brent crude oil prices, based on the Center’s oil view project.
“Although the second wave of COVID-19 is here, the total global oil demand is expected to increase year-on-year (YoY) by 4.2 million barrels per day (MMb/d) in 2021, and further grow by 3.5 MMb/d in 2022, returning to 2019 levels by the third quarter (Q3) 2022,” according to the report.
KOMO expected the decline of the global oil demand by 200 thousand barrels per day (Kb/d) in Q1 2021 (YoY). It also predicted that the global program of vaccinations is likely to allow a recovery in economic activity after April.
The International Monetary Fund (IMF) predicts economic growth of around 5.4% in 2021, compared with a decline in real gross domestic product (GDP) in 2020 of -4.4%. However, KOMO estimates a forecast more in line with the OECD’s outlook for growth of 4.2%, which presumes that GDP levels will only reach 2019 levels by the end of 2021.
Regarding the supply, the report emphasized the growth of the total global oil supply by 650 Kb/d in 2021 with a stronger recovery of 3.4 MMb/d in 2022. In addition, OPEC+ members should account for most of the rebound in supply in 2021, as the gains will likely not be driven by new projects, but by ramping up existing assets.
KOMO analyses showed that oil prices are going to rise in Q1 2021, and that Saudi Arabia’s oil demand is expected to rebound by 80 Kb/d in 2021 and to continue rising by a further 77 Kb/d in 2022.
Further to that, it identifies several risks that affect the oil market, such as: OPEC compliance, shale rebound, transport patterns, and major conflict.
KAPSARC has recently announced that it ranked 12th out of 60 in the Energy and Resource Policy category of the University of Pennsylvania Think Tank survey for the year 2020 and held steady at 15th out of 101 in the MENA Region think tanks of all categories.
This article originally appeared on Arab News