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Could the economy be heading back toward normal by April thanks to the Omicron variant’s rapid spread? That’s the suggestion by the IEA, as they estimate the rapid spread of the virus could lead to herd immunity by the end of the first quarter, leading to a relatively normal second half of 2022. The Wall Street Journal’s William Horner reports:
Global oil demand will exceed pre-pandemic levels this year thanks to growing Covid-19 immunization rates and as recent virus waves haven’t proved severe enough to warrant a return to strict lockdown measures, the International Energy Agency said Wednesday.
In its monthly oil market report, the IEA hiked its oil demand growth forecast for the coming year by 200,000 barrels a day, to 3.3 million barrels a day. The Paris-based agency also raised its demand growth forecasts for 2021 by 200,000 barrels a day to 5.5 million barrels a day.
Factoring in the IEA’s more optimistic forecasts are signs that recent coronavirus variants have been faster spreading but less fatal, helping boost global economic resilience to the virus, and allowing states to continue on a path of gradually winding down lockdown restrictions.
“The number of Covid cases is exploding world-wide but measures taken by governments to contain the virus are less severe than during earlier waves and their impact on economic activity and oil demand remain relatively subdued,” the IEA said.
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While the Omicron variant has seen infection rates surge to record levels, its milder nature should help spread immunity to the virus and aid a faster return to pre-virus oil demand, the agency said.
“At the current speed of transmission, a large part of the population will likely have gained immunity by infection or vaccination by the end of the first quarter,” the group said. “As a result, restrictions to mobility could be minimal in the second half of the year.”
Total demand this year should stand at 99.7 million barrels a day, around 200,000 barrels a day more than 2019 levels, the IEA said. Last month the IEA was expecting this year’s oil demand to be broadly on par with pre-pandemic levels.
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