Citing coronavirus outbreak and its impact on economic activities Paris-based energy think tank, the International Energy Agency on Monday said global oil demand is set to fall for the first in 11 years and has slashed global demand outlook by over a million barrels per day (bpd).
Fatih Birol, executive director of IEA had warned two weeks ago that the coronavirus outbreak could hit global oil demand growth more than initially expected.
The IEA now sees global demand falling by 90,000 bpd year on year in 2020, the agency said in its Monthly Oil Market for March 2020.
In the February market report, the IEA had slashed its 2020 oil demand growth forecast by 365,000 bpd to just 825,000 bpd—the lowest oil demand growth since 2011, and warned that the coronavirus outbreak would lead to the first contraction in global oil demand in more than a decade.
In view of the global spread of the coronavirus and its impact on the global economy, the agency now expects full-year oil demand to drop, a report by Tsvetana Paraskova, an analyst at oilprice.com said.
“While the situation remains fluid, we expect global oil demand to fall in 2020 – the first full-year decline in more than a decade – because of the deep contraction in China, which accounted for more than 80 percent of global oil demand growth in 2019, and major disruptions to travel and trade,” the IEA said in its March report.
The report commented on the collapse of the OPEC+ coalition, saying that the implication is that “the OPEC+ countries will be free to exercise their commercial judgement when assessing future levels of production.”
The IEA report comes a day after Saudi Arabia effectively launched an oil price war on Russia after the former allies abruptly ended the OPEC+ agreement last Friday.
Over the weekend, the Saudis slashed their official selling prices by $6-7 a barrel to all markets including Asia, and signaled they would boost production as of April, sending oil prices into a tailspin on Monday to the biggest fall since 1991.
STEPHEN ONYEKWELU
