The resurgence in new Covid cases globally triggered by the spread of the Delta variant will hit oil demand in the coming months, according to the international energy watchdog.
The International Energy Agency said the fresh wave of Covid infections in Asian countries is likely to curb oil consumption as authorities reimpose restrictions on economic activity to dampen the spread of the virus.
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The Paris-headquartered IEA said in their monthly report examining the outlook for oil said: “Growth for the second half of 2021 has been downgraded more sharply, as new COVID-19 restrictions imposed in several major oil consuming countries, particularly in Asia, look set to reduce mobility and oil use.”
“We now estimate that demand fell in July as the rapid spread of the COVID-19 Delta variant undermined deliveries in China, Indonesia and other parts of Asia.”
The organisation expects oil consumption to be half a million barrel per day lower in the second half of the year compared to its previous estimates.
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International benchmarks edged down on the news. WTI and Brent Crude dropped 0.3 per cent and 0.18 per cent to fall to $69.05 and $71.33 respectively.
The White House yesterday urged the alliance of oil producing nations – Opec – to ramp up supply to ease oil price rises.
Prices plummeted over four per cent at the start of this week, driven by mounting fears that Chinese authorities could reimpose measures the curb the spread of Covid after case numbers skyrocketted in the country over the last week.