Global oil market could face another volatile year, but demand was surging higher as the sector had weathered the impact of the Omicron Coronavirus variant, the International Energy Agency (IEA) said on Wednesday. 

Oil prices had tanked as the pandemic emerged in 2020, but have recovered since then, reaching their highest levels in more than seven years on Wednesday. Global benchmark Brent crude oil futures hit $88.44 a barrel, while futures of another benchmark, the US West Texas Intermediate (WTI) crude oil, touched $86.96 a barrel on Wednesday.

The IEA revised its demand estimates, saying that it increased by 5.5 million barrels per day (bpd) in 2021 and would grow by 3.3 million bpd in 2022 – 200,000 bpd higher than its previous estimate. This will take total demand above the pre-COVID level in 2022 at 99.7 million bpd. 

While COVID cases have soared, “measures taken by governments to contain the virus are less severe than during earlier waves, and their impact on economic activity and oil demand remains relatively subdued”, the IEA said. 

But the agency, which advises governments on energy policy, said that supply growth expectations were being tempered by “disruptions and production shortfalls” by some members of the OPEC+ group of top oil producers. 

“If demand continues to grow strongly or supply disappoints, the low level of stocks and shrinking spare capacity mean that oil markets could be in for another volatile year in 2022,” the IEA said.