Oil demand is set to fall year on year in the first quarter for the first time since the depths of the financial crisis in 2009 hurt by the coronavirus outbreak in China, the International Energy Agency (IEA) said on Thursday.
“The consequences of Covid-19 for global oil demand will be significant. Demand is now expected to contract by 435,000 barrels per day (bpd) in Q1, the first quarterly decrease in more than a decade,” the Paris-based IEA said in a monthly report, using the new scientific name for the virus.
“For 2020 as a whole, we have reduced our global growth forecast by 365,000 bpd to 825,000 bpd, the lowest since 2011,” the IEA said, adding that it assumed economic activity from the second quarter would return progressively to normal.
In the second quarter it said it expected oil demand to grow 1.2 million barrels per day before normalising in the third quarter with growth of 1.5 million bpd on likely economic stimulus measures in China.
It forecast a fall in demand for oil produced by OPEC while output growth by U.S. companies might not be impacted until later in the year.
OPEC output in January sank to its lowest level since the 2009 global recession, the IEA said, as a blockade reduced Libyan exports and the UAE reined in production.
“With Covid-19 potentially hitting demand hard in H1, producers are under pressure to make further cuts,” it said.
OPEC, Russia and other producers, a group known as OPEC+, have agreed to cut output by 1.7 million bpd until the end of March to support the market.
OPEC+ is considering holding an extraordinary policy meeting to consider deeper cuts, sources said.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.