The International Energy Agency said it expects global oil demand to fall for the first time since 2009, citing the impacts of the coronavirus on the economy.
The agency said demand fell worldwide by approximately 2.5% in the first quarter of 2020 and it was expected to shrink by 90,000 barrels per day for all of 2020.
The current assumption is that demand will return to “close to normal” in the second half of 2020
“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,” IEA executive director Fatih Birol said.
“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,” said Birol.
Under the IEA’s pessimistic case, oil demand would fall to 730,000 barrels per day in 2020. Under a more optimistic case, the IEA said global oil demand would grow by 480,000 barrels per day.
“We are following the situation extremely closely and will provide regular updates to our forecasts as the picture becomes clearer,” Birol said.
The Organization for Economic Cooperation and Development, earlier this month, said global gross domestic product would grow by 1.5% in 2020, down from its previous estimate of 2.9% before the outbreak of the coronavirus, which has infected more than 108,000 people and killed more than 3,800.
“The immediate 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 IEA said.