Global oil consumption exceeded oil production for six consecutive quarters ending with Q4 2021. This prompted a continuous withdrawal of oil from global reserves and a significant increase in crude oil prices.

Supply remained limited because of reduced production by OPEC members, limited investment by US oil producers and other supply disruptions. But according to forecasts, the market will return to balance starting Q1 2022. Additionally, growth in production will increase reserves in the 2nd quarter of 2022, which will continue until 2023.

Fatih Birol, head of the International Energy Agency, said global oil demand appeared to be more resilient to omicron's effect than what the IEA expected.

Birol added that supply disruptions in Libya and Kazakhstan contributed to the imbalance with demand.

Not long ago, Ecuador cut production due to repairs on two key pipelines caused by increasing land erosion. But a report from Argus said production should return to normal next month.

In Nigeria, production continues to suffer from technical and operational problems. Other OPEC members also found it difficult to boost output in line with quotas.

The IEA forecasts that global fuel consumption will decline this quarter due to pandemic-related restrictions. However, actual restrictions do not appear to have such a major impact.

At the same time, the IEA acknowledged in its December report that unlike jet fuel demand, demand for road transport fuels will remain strong even amid the latest spike in infections. They said omicron's impact on oil demand will be more muted than previous strains.

The IEA reported that global oil demand rose by 5.4 million barrels per day in 2021, and this year it is likely to slow to 3.3 million bpd, with overall demand returning to pre-pandemic levels of 99.5 million bpd.

The next release of IEA's oil market report is scheduled for next Wednesday and may well contain some changes in the forecasts.