A 3D printed oil pump jack is seen in front of the displayed OPEC logo on April 14. Illustration: VCG

The Omicron coronavirus variant will slow the recovery in global demand for oil but the market will be "more comfortable" in 2022, the International Energy Agency (IEA) said on Tuesday.

The oil market "appears to stand on a better footing than it has for some time," the IEA wrote in its latest monthly report.

The emergence of Omicron at the end of November "sparked a steep sell-off in oil, but initial pessimism has now given way to a more measured response," it said. 

"The surge in new COVID-19 cases is expected to temporarily slow, but not upend, the recovery in oil demand."

It said "new containment measures put in place to halt the spread of the virus are likely to have a more muted impact on the economy versus previous COVID[-19] waves, not least because of widespread vaccination campaigns."

The IEA, which unites oil-consuming countries and advises governments on energy policy, said it had revised downward its forecast for global oil demand by an average 100,000 barrels per day for both 2021 and 2022 due to new restrictions on international travel. 

The agency said it is now penciling in an increase in global oil demand of 5.4 million barrels per day in 2021 and by 3.3 million in 2022, when it will return to pre-pandemic levels at 99.5 million barrels per day. 

On the output side, global oil production was poised to outpace demand from December, the IEA predicted, driven by higher production in the US and the countries that make up the so-called OPEC+ group of oil producers.

AFP