The International Energy Agency (IEA) on Monday said that global oil demand in 2020 is set for the first contraction since 2009 because of the coronavirus outbreak which has slowed down global economic activity. This decision came amid a plunge in oil prices following the OPEC+ deal collapse.
IEA now expects oil demand to reach 99.9 million bpd this year, compared to its previous forecast of 1 million bpd. This reflects IEA’s estimate of a 90,000 bpd contraction in global oil demand, which will mark the first contraction since 2009. IEA said that if governments failed to contain the virus, demand would drop further by up to 730,000 bpd.
IEA estimated global oil demand in the first quarter to be 2.5 million bpd lower than in the same period last year. China is expected to contribute 1.8 million bpd of the decline. The coronavirus has prompted authorities to restrict travel and prohibit flights. The virus containment measures also dented industrial activity, particularly in China and some other Asian countries.
Looking ahead, IEA is optimistic that oil demand will rebound quickly by 2.1 million bpd in 2021. But the growth is expected to slow down only 800,000 bpd by 2025, due to improved car efficiency, increased electromobility, and push to cut greenhouse emissions.
