For the first time since 2009, global oil demand is expected to decline in 2020 due to the coronavirus outbreak, the International Energy Agency (IEA) said on Monday 9 March.
So while the IEA previously forecast an increase in global oil demand of 825,000 barrels per day (bpd) compared to 2019, the agency now anticipates a decrease of about 90,000 barrels per day, which would bring global oil demand in 2020 to 99.9 million barrels per day.
These forecasts are based mainly on two consequences of the COVID-19 epidemic: the sharp contraction of oil usage in China and the “major disruption” to travel and economic activity in general caused by the virus, the IEA explains.
“Its impact [of the coronavirus] on oil markets is particularly severe because it is stopping people and goods from moving around”, said Fatih Birol, Executive Director of the IEA.
Given the “extreme uncertainty” surrounding the development of the epidemic, the Agency also established two other scenarios: one more pessimistic for oil markets (-730,000 bpd) and one that is more optimistic (+480,000 bpd).
Mr Birol is also “concerned” about the consequences of the collapse in prices for the stability of certain oil-producing countries that are highly dependent on oil revenues, countries such as Iraq, Angola and Nigeria. “In some major producer economies, sustained low prices could make it almost impossible to fund essential areas such as education, health care & public sector employment”, he warned on Twitter.
These forecasts come as black gold has collapsed by more than 30% in the Asian financial markets—its worst fall since the first Gulf War in 1991—after Saudi Arabia decided to drastically lower its delivery prices. The decision follows the failure of negotiations between the Organization of the Petroleum Exporting Countries (OPEC) and Russia over a new agreement to reduce their production in order to support oil prices.
To look at the IEA forecasts: http://bit.ly/2IvLcWq (Original version in French by Damien Genicot)