MOSCOW (MRC) -- Oil supply will soon overtake demand as some producers are set to pump at or above all-time highs, the International Energy Agency (IEA) said on Wednesday, while demand holds up despite the spread of the Omicron coronavirus variant, according to The Economic Times.
"This time around, the surge is having a more muted impact on oil use," the Paris-based IEA said in its monthly oil report.
"While the steady rise in supply could see a significant surplus materialise in 1Q22 and going forward, available data suggest that 2022 is starting off with global oil inventories well below pre-pandemic levels," it said.
The United States, Canada and Brazil are set to pump at all-time highs for the year while Saudi Arabia and Russia could also break their output records.
"World oil supply in 2022 has the potential for a massive Saudi-driven gain of 6.2 million bpd (barrels per day), provided the OPEC+ alliance continues to unwind the remainder of its record 2020 supply cut."
OPEC and other producers including Russia, a group known as OPEC+, is unwinding record output cuts put in place last year to counter a fall in demand caused by the pandemic.
Its plan calls for adding back 400,000 bpd of production per month to fully unwind the cuts by the end of September, although some countries are struggling to raise output, with OPEC+ in December falling 790,000 bpd short of its target.
Eased lockdown measures mean mobility remains robust, the IEA added, leading the energy watchdog to increase its oil demand estimate for last year and 2022 by 200,000 barrels per day (bpd).
"Supply disruptions and underperformance by OPEC+ are tempering growth expectations for 2022," it said.
But the IEA warned that with commercial oil and fuel stocks in OECD countries at their lowest levels in seven years, any dents in supply could render the oil market in 2022 volatile.
As MRC informed before, earlier this month, Saudi Aramco signed 10 agreements with South Korean firms to advance its downstream strategy and support the development of low-carbon energy solutions, while creating new financing options for the company.
We remind that in June 2020, Aramco finalized its USD69 billion acquisition of a 70% stake in Saudi Basic Industries Corp., the Middle East's biggest petrochemical maker. SABIC reported more than a fivefold year-on-year increase in its Q3 net profit to USD1.49 billion thanks to higher average sales prices.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,265,290 tonnes in the first eleven months of 2021, up by 14% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,363,850 tonnes in January-November, 2021, up by 25% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.