Page 22 - ISQ January 2021

INVESTMENT STRATEGY QUARTERLY

2021 Energy Outlook: Oil Market Recovery

in 2021 Will Follow Vaccine Ramp-Up –

And in the Meantime, Global Energy Transition

Is Accelerating

Pavel Molchanov, Director, Energy Analyst, Equity Research

It is not often that we reference the World Health Organiza- across the board, or large in-person events and entertainment
tion when writing about oil, but this is one of those times. venues can resume. Broadly speaking, we anticipate that, after the
The past year’s epic oil market crash was precipitated by tough wintertime period with the return of numerous lockdowns
in Europe and elsewhere, demand recovery should resume in the
the most severe fall-off in global oil demand in modern his-
spring and summer of 2021. While some segments of the oil market
tory. This was a direct result of the COVID-19 pandemic and (notably aviation) are unlikely to fully recover until 2023 at the
ensuing lockdowns. earliest, there is a plausible scenario of overall demand reaching
100 million barrels per day in 2022.
For oil demand to get back to the pre-pandemic run-rate of 100
million barrels per day – which implies a more than 5% rebound
from year-end 2020 levels – there must be overall economic nor-
malisation, and that depends on widespread vaccine availability While some segments of the oil market (notably avia-
for the general population: billions of people around the world. tion) are unlikely to fully recover until 2023 at the

Because the pace of vaccine production and distribution remains earliest, there is a plausible scenario of overall
uncertain at this early stage in the process, it is impossible to put demand reaching 100 million barrels per day in 2022.
a precise timetable on when, for example, schools will be open

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