According to the International Energy Agency (IEA), oil production may soon outstrip demand as certain producers are projected to pump at or above all-time highs, while demand remains strong despite the development of the Omicron coronavirus type.

“This time around, the spike is having a more muted influence on oil usage,” the Paris-based International Energy Agency (IEA) stated in its monthly oil report.

“The continuing growth in supply may see a major surplus materialize in 1Q22 and moving beyond,” it warned, with the US, Canada, and Brazil likely to pump at all-time highs for the year, while Saudi Arabia and Russia may also smash production records.

Eased lockdown measures mean mobility remains robust, the IEA added, leading the energy watchdog to increase its oil demand estimate for last year and 2022 by 200,000 barrels per day (bpd).

But the IEA warned that with commercial oil and fuel stocks in OECD countries at their lowest levels in seven years, any dents in supply could render the oil market in 2022 volatile.