Global Oil Demand to Decline in 2020 amid Coronavirus Impact: IEA

Commodities & Futures
© Reuters.  © Reuters.

By Noreen Burke – Global oil demand is expected to fall this year for the first time in over a decade, as the rapid spread of coronavirus around the world curtails travel and broader economic activity, according to the International Energy Agency’s latest oil market forecast.

The IEA now sees global oil demand at 99.9 million barrels a day in 2020, down around 90,000 barrels a day from 2019. This is a sharp downgrade from the IEA’s forecast in February, which predicted global oil demand would grow by 825,000 barrels a day in 2020. At the start of the year, the IEA had estimated growth of over 1 million b/d.

 “The coronavirus crisis is affecting a wide range of energy markets – including coal, gas and renewables – but its impact on oil markets is particularly severe because it is stopping people and goods from moving around, dealing a heavy blow to demand for transport fuels,” said Dr Fatih Birol, the IEA’s Executive Director.

“This is especially true in China, the largest energy consumer in the world, which accounted for more than 80% of global oil demand growth last year. While the repercussions of the virus are spreading to other parts of the world, what happens in China will have major implications for global energy and oil markets.”

The report came as oil prices lost more than a quarter of their value on Monday and were on track for their biggest daily rout since the first Gulf War after Saudi Arabia slashed export prices in a market already reeling from the impact of the coronavirus.

Saudi Arabia slashed its official selling prices and made plans to ramp up crude output next month after Russia balked at making a further steep output cut proposed by the Organization of Petroleum Exporting Countries to stabilize oil markets.

futures were down $ 8.99, or 20%, at $ 36.2 a barrel by 05:21 AM ET (0922 GMT), after earlier dropping to $ 31.02, their lowest since Feb. 12, 2016. Brent futures were on track for their biggest daily decline since Jan. 17, 1991, when prices dropped at the start of the first Gulf War.

fell by $ 8.57, or 21%, to $ 32.66 a barrel, after touching $ 27.34, also the lowest since Feb. 12, 2016. The U.S. benchmark was potentially heading for its biggest decline on record, surpassing a 33% fall in January 1991.

–Reuters contributed to this report

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