Platts Analytics has forecast global oil supply growth of 3 million barrels per day this year and 5.5 million b/d in 2022.
On June 1, OPEC-plus reaffirmed plans to increase quotas as decided on the last monthly meeting. This was as expected.
“The big question is how OPEC-plus will respond after July when quotas are planned to stay flat but call on OPEC-plus supply rises strongly,” said Ash Singh, Manager for supply and production analytics at S&P Global Platts.
The US forecast was revised slightly down due to a deeper impact from the February freeze offs and slower than expected rig increases in recent weeks. Strong growth is still expected in 2H21 and 2022 despite the downward revision.
Platts Analytics expects a framework agreement before June 18 Iranian presidential elections but said the clock ticking odds of post-June 18 deal is rising.
Full sanctions relief can come by September in the base case and by Q1 2022 if there is delay. Any delays to the base case timeline will be further bullish signal to a market that needs significant supply growth to meet demand needs.
On the other hand, demand in 2022 is forecast to grow significantly on increasingly optimistic economic data and forecasts in the United States, Europe and China, resulting in 2022 global oil demand growth to 4.5 million b/d over 2021, reaching 103 million b/d.
This means the 2022 demand will surpass 2019 levels by about 1 million b/d, said Kang Wu, Head for global macro and demand at S&P Global Platts. Despite downward revisions in India and Japan, global oil demand is estimated to have grown by 1.4 million b/d in May over April.
Upgraded outlook for Europe, resilience in the United States, China and the Middle East continue to keep the month-on-month demand growth high at 6.9 million b/d over June to August.
Key support is found from accelerating economic growth along with seasonal factors. For the year as a whole, global oil demand is expected to grow by 5.6 million b/d which will be 3.5 million b/d below pre-Covid levels in 2019.