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The International Energy Agency (IEA) expects global oil demand to decline this year as the impact of the Covid-19 virus continues to spread around the world.
The extent of the global impact of the virus is still uncertain, but demand for oil has nonetheless dropped for the first time since 2009, owing to a deep contraction in oil consumption by China and major disruptions to global travel and trade.
The IEA now sees global oil demand at 99.9-million barrels a day in 2020, down around 90 000 bbl/d from 2019. This is a sharp downgrade from the IEA’s forecast in February, which predicted global oil demand would grow by 825 000 bbl/d in 2020b
“The short-term outlook for the oil market will ultimately depend on how quickly governments move to contain the coronavirus outbreak, how successful their efforts are and what lingering impact the global health crisis has on economic activity.
“The virus outbreak is affecting a range of energy markets, including coal, gas and renewables, but its impact on oil markets is particularly severe owing to the virus forcing people to stop moving around, as well as move goods around, which deals a heavy blow to demand for transport fuels,” explains IEA executive director Dr Fatih Birol.
He adds that this is especially true in China as the largest energy consumer globally, accounting for more than 80% of global oil demand growth last year.
To account for the extreme uncertainty facing energy markets, the IEA has developed two other scenarios for how global oil demand could evolve this year.
In a more pessimistic low case, global measures fail to contain the virus, and global demand falls by 730 000 bbl/d in 2020.
In a more optimistic high case, the virus is contained quickly around the world and global demand grows by 480 000 bbl/d.