In contrast, a more optimistic high case scenario assumes a quick containment and economic recovery, pushing up global demand by 480,000 barrels a day. As the situation remains fluid, the IEA said it provide regular updates to our forecasts as the picture becomes clearer.
Heavy blow to transport fuels
“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,” said Dr Fatih Birol, the IEA’s Executive Director.
This particularly hold true in China, the world’s largest energy consumer, 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,” Dr Birol pointed out.
The IEA now sees global oil demand at 99.9 million barrels a day in 2020, down around 90,000 barrels a day from 2019. This is a sharp downgrade from the IEA’s forecast in February, which predicted global oil demand would grow by 825,000 barrels a day in 2020.
Oil producers urged to diversify
Looking ahead, the IEA once again called on hydrocarbon producing countries to diversify their economies. “The impact of the coronavirus on oil markets may be temporary. But the longer-term challenges facing the world’s suppliers are not going to go away, especially those heavily dependent on oil and gas revenues,” Dr Birol said.
“These producer countries need more dynamic and diversified economies,” he urged, “in order to navigate the multiple uncertainties that we see today.”