Global oil demand to face 1st quarterly drop in more than a decade – IEA

The International Energy Agency (IEA) has cut its 2020 growth forecast, saying that global energy demand is going to fall to the lowest level since 2011, having been hit hard by the coronavirus outbreak.

The aftermath of the epidemic is set to drive down oil demand by 435,000 barrels a day in the first three months of 2020, compared to the same period one year ago. This will mark the first quarterly contraction in more than a decade and will have an impact on annual results, the IEA said in its oil market report, released on Thursday.

“We have cut our 2020 growth forecast by 365 kb/d to 825 kb/d, the lowest since 2011. Lower-than-expected consumption in the OECD trimmed 2019 growth to 885 kb/d,” the report said.

The gloomy outlook comes as China, which accounted for more than three quarters of global oil demand growth last year, is struggling to contain the coronavirus outbreak, known as Covid-19. On Thursday, the Chinese authorities announced that the virus has already killed more than 1,300 people, while the number of cases has reached nearly 60,000.

The epidemic could shake crude prices even more than threats to security of supply, such as tensions in Iraq and a fall in Libyan oil production, the IEA notes. Prices have been plummeting since the beginning of the year, with the Brent and WTI benchmarks trading at $55.15 per barrel and $50.77 per barrel, respectively.

“The effect of the Covid-19 crisis on the wider economy means that it will be difficult for consumers to feel the benefit of lower oil prices,” the report concludes.

On Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) slashed its forecast for global oil demand by 230,000 barrels per day. Some OPEC members have already called for an emergency meeting to consider new output cuts in order to prevent the market from tanking further.

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