Non-OECD oil demand has recovered slower than in the OECD in recent months due to a significant surge in COVID-19 cases in some countries (Argentina, Brazil, India, Malaysia, Thailand), according to data from the International Energy Agency (IEA). The uneven distribution of vaccines at the global level means that this situation could persist in second-half 2021 and into 2022, unless access to vaccines improves. Indications from vaccine manufacturers suggest the theoretical supply should suffice to vaccinate everyone on Earth by first- or second-quarter 2022.
The availability of vaccines against the COVID-19 virus is likely to increase dramatically in second-half 2021 should manufacturers ramp-up output as they indicate. An estimated 2.3 billion doses had been produced at the end of May, up from just 125 million at the end of 2020. Cumulative production is likely to increase to 6 billion doses by the end of September and 9.7 billion doses by end-December, based on public plans from manufacturers compiled by the IEA.
“This is enough to vaccinate everyone once or more than 60% of the world’s population twice in 2021, thus considerably reducing the impact of the pandemic on economic activity and mobility. Global vaccine manufacturing capacity is likely to continue to increase throughout the second half of 2021, reaching an estimated 1.3 billion doses per month by the end of December. In 2022, further capacity increases are certain as manufacturers continue to gain experience and with more vaccines likely to gain approval from regulators,” IEA said.
In practice, however, available doses have not been distributed evenly, leaving open the possibility that the virus will continue to spread, IEA noted.
Some countries and regions multiplied orders to ensure access to vaccines as they became available, limiting residual availabilities. Not all orders have been delivered to date and orders may be withdrawn or donated once populations are adequately vaccinated. The European Union has already entered purchase agreements for up to 2.9 billion doses, the US for 1.2 billion doses, and Canada for 380 million doses, more than enough to vaccinate their entire populations, according to purchase data. By contrast, India has bought just 380 million doses and will receive an additional 100 million under the World Health Organization (WHO)’s COVAX initiative in first-half 2021, not enough to cover its population of 1.4 billion. The same picture emerges in other parts of Asia, Africa, and Latin America.
“We estimate a country’s likelihood of reaching 60% immunity based on the number of vaccinations to date, the recent pace of vaccinations multiplied by a factor dependent on how many doses the country has ordered. Based on this model, Israel is likely to reach 60% of its population vaccinated by June, the UK and the US by July and the EU by August, although in practice immunity will be even higher in all regions including the number of people who have caught the virus. The same figures show that India is unlikely to reach herd immunity until late in 2022, meaning that new Covid-outbreaks could occur in 2021 second half or 2022. Most African countries have not ordered enough jabs to reach the 60% threshold at all in 2021 or 2022,” IEA said.
“We have taken this into account in our demand model by constraining the potential fuel demand growth of some non-OECD economies, whereas for OECD countries we assume a fairly quick return to normalcy except in the aviation sector.”
“Advanced economies are likely to donate vaccines as availability increases and a significant proportion of their population becomes vaccinated. The question is whether such donations will come in time to avoid further epidemic surges. While the end of the pandemic is in sight in advanced economies, developing countries are not yet done with the Covid-19 pandemic,” IEA said.
According to IEA’s latest forecast in June, global oil demand of 2021 will increase by 5.4 million b/d year-over-year to average 96.4 million b/d, partially recovered from the 8.6 million b/d drop in 2020. This forecast was however reduced by 50,000 b/d from the forecast made in May, owing to slow vaccination campaigns in non-OECD economies.
