The Omicron variant of Covid-19 could cost the global oil market as much as 2.9 million barrels per day (bpd) of demand in the first quarter of 2022, bringing total expected demand down from 98.6 million bpd to 95.7 million bpd, if it triggers more lockdowns or restrictions, according to Rystad Energy
If the variant spreads rapidly, causing a rise in Covid cases and the reintroduction of lockdowns, Rystad Energy predicts that oil demand could fall from an expected 99.1 million bpd to 97.8 million bpd in December 2021 alone – a drop of 1.3 million bpd. Demand could tumble further in January 2022, shedding 4.2 million bpd to a level of 94.2 million bpd.
As countries and governments learn to live with Omicron, or vaccine manufacturers adapt existing shots to counter the variant, the full-year impact will likely be less severe. Average 2022 demand would fall to 98 million bpd, a drop of 2.1 million bpd against the company's current base case – or “mean” – scenario.
“The likelihood of increasing lockdowns in the coming months has risen dramatically due to the new Omicron variant, and this will undoubtedly impact global oil demand. Given the early stage of the variant outbreak and the unknowns related to contagiousness and vaccine efficacy, we can only hope this scenario turns out to be a false alarm. Still, if the risk is real, the oil market will need to recalibrate accordingly,” said Claudio Galimberti, senior vice-president of analysis at Rystad Energy.