Heatwaves in Europe and dwindling natural gas supplies due to high fuel prices are boosting demand for oil as power plants seek alternative fuel sources to meet growing demand for electricity, according to the International Energy Agency .
As the EIA notes, the unprecedented high temperatures hitting the continent have put an unexpected burden on electricity networks, increasing demand, while high natural gas prices and limited supplies – after the “brake” on exports from Russia – forcing electricity producers and heavy industry in the region to turn to oil as an alternative fuel source.
The increase in demand for oil comes just as the supply and rising prices that helped fuel inflation are beginning to show signs of leveling off.
The EIA notes that this trend will lead to an increase in oil demand by 380,000 barrels per day this year, prompting the Agency to revise upwards its forecast for demand in the whole of 2022.
In particular, the Agency raised their forecasts for total oil demand by 500,000 barrels per day in both 2022 and 2023, to 99.7 million and 101.8 million barrels respectively.
Source: Capital
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