ECONOMY
Oil demand set for first contraction since 2009 due to coronavirus – IEA
Baku, March 10, AZERTAC
Global oil demand is set to contract in 2020 for the first time in more than a decade as global economic activity stalls due to the coronavirus, the International Energy Agency said on Monday, according to Reuters.
The energy watchdog said it expected oil demand to be 99.9 million barrels per day (bpd) in 2020, lowering its annual forecast by almost 1 million bpd and signaling a contraction of 90,000 bpd, the first time demand will have fallen since 2009.
Global oil demand fell 2.5 million bpd on the year in the first quarter, or around 2.5%, the IEA estimated in its report, as coronavirus cut travel and economic activity. Around 1.8 million bpd of that was in China.
The Paris-based IEA said in its medium-term outlook report that in an extreme scenario where governments fail to contain the spread of the coronavirus, which has affected over 100,000 people, consumption could drop by up to 730,000 bpd.
The virus has led to a sharp drop in industrial activity particularly in China and other Asian economies, as well as Italy, one of the worst-affected places outside China. The virus has led to a slowdown in demand for ground and air transport.
IEA Executive Director Fatih Birol urged producers to “behave responsibly” in the face of the coronavirus crisis, after a deal on output restraint between OPEC, Russia and other producers collapsed last week, sending oil prices plunging.
“At such a time of uncertainty and potential vulnerability to the world economy ... playing Russian roulette with the oil markets may well have grave consequences,” Birol told reporters.