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Goldman Sachs Financial and Investment Services expects the average global demand for crude oil to rise to record levels.

Goldman Sachs said that a record rise in oil demand will occur over the next two years, supported by increased demand for the aviation and transportation sectors, as well as the construction of infrastructure.

“There has already been a record spike in demand even before this latest mutation (of the coronavirus) emerged,” Damien Corvalin, director of energy research at Goldman Sachs, told reporters. “Add to that an increase in demand for the aviation sector and the global economy is still growing.”

“You will see how the average demand will rise to a new record in 2022 and then in 2023,” he said.

Corvalin added that recovery has been hampered by the high incidence of COVID-19 in regions of the northern hemisphere during the winter, but the closures are still limited.

Goldman Sachs expects a steady growth in global demand for oil until the end of the current decade, to reach about 106 million barrels per day, as it believes that the transition to clean energy sources will be gradual.

Corvalin said electric cars will reduce gasoline demand a little, but there is still a long way to go for trucks and planes to switch to a carbon-neutral fuel.

He added, “About 6 million electric cars are now sold annually. But this only reduces demand by less than 100,000 barrels per day in a market of 100 million barrels per day, so this is still a small amount.”

Oil prices today
US crude (West Texas) decreased by 0.72% to record about $71.83 a barrel, and Brent crude fell by 0.61% to record at $74.54 a barrel.

The vision of “International Energy”
And the International Energy Agency said last Tuesday, December 14, that the rise in cases of Covid-19 and the emergence of the Omicron strain will reduce global demand for oil.

The agency explained that the broader picture indicates that increased production will exceed demand this month and rise next year.

“The rise in COVID-19 cases is expected to slow but not stop the ongoing recovery in oil demand,” the Paris-based agency said.

“The new containment measures imposed to stop the spread of the virus will likely have a milder impact on the economy than previous Covid waves,” she added.

The agency added that the United States will be solely responsible for the largest increase in production for the second month in a row, with the acceleration of drilling work there.

Next year, Saudi Arabia and Russia may record annual production levels if the OPEC + group ends the agreed production cut in full.

“OPEC” and hopes for 2022
“OPEC” expected that global oil demand growth will have rebounded this year by 5.7 million barrels per day “on an annual basis.”

She added that it may increase by 4.2 million barrels per day in 2022, in a view not different from what the organization announced for the two years last month.

In its monthly report issued on Monday, December 13, “OPEC” attributed the expected increase in demand to the steady recovery in economic activities and the improvement in transportation fuel consumption, despite the new infections with Covid-19 and the measures to contain it.

She said that demand from non-OECD countries may have increased by 3.2 million barrels per day this year, while the increase in OECD countries may be estimated at 2.5 million barrels per day.

Oil demand in OECD countries is expected to grow by 1.8 million barrels per day in 2022, while the expected increase in demand from outside the region is estimated at 2.3 million barrels per day, supported by the steady momentum in economic activities, particularly in China India, and other Asian countries. Meanwhile, as vaccination rates increase, the effect of the OMICRON variant is expected to be mild and short-lived.

Oil supply from outside OPEC countries
The oil supply from outside the “OPEC” countries was affected by the significant interruption in production in the second half of this year, due to weather, accidents, prolonged and unexpected maintenance, as well as conditions related to COVID-related safety measures in offshore platforms and drilling areas. Therefore, “OPEC” estimates the growth of supply from outside its members in 2021 at about 700,000 barrels per day.

It is estimated that Canada, Russia, and China were the main drivers of non-OPEC supply growth in 2021, according to the report.

In 2022, non-OPEC supply is expected to witness robust growth of 3 million barrels per day on an annual basis, on the back of expectations of a gradual increase in drilling and completion activities in the United States, leading to an expected growth of 600,000 barrels per day in the United States.

OPEC expects the United States and Russia to contribute two-thirds of the total projected growth, followed by Brazil, Canada, Kazakhstan and Norway.

The organization estimated the volume of investment in the upstream sector outside “OPEC” in 2021 and 2022 at about $350 billion each, which indicates a 50% decrease compared to the 2014 level, thus limiting the potential for growth.

While the expected recovery in 2021 was surrounded by challenges, OPEC said it sees some of these challenges continuing into the coming year.