Global oil demand is set to fall 2.5 million b/d in the first quarter compared with a year earlier due to the coronavirus outbreak, with the "call" on OPEC producers falling to 25 million b/d, 3.5 million b/d below their assumed output level, the International Energy Agency said Monday.
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In its monthly oil market report, the IEA forecast a full-year reduction in demand of 90,000 b/d in 2020, the first annual fall since 2009, based on "close to normal" demand in the second half of the year, but acknowledged high levels of uncertainty.
Setting out alternative high and low scenarios, it said global oil demand could drop by 730,000 b/d this year in a "pessimistic" low-case scenario.
Its estimate of the "call" on OPEC in Q1, or need for OPEC crude, was 4.7 million b/d lower than for Q1 2019. For 2020 as a whole, it put the call on OPEC at 27.3 million b/d.
"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."
Based on reduced expectations resulting from the coronavirus outbreak, as well as stagnating transport demand, the IEA also cut its five-year oil demand growth estimate out to 2025 to 950,000 b/d annually, as it published its separate medium-term oil market report, titled 'Oil 2020.'
It now assumes total oil demand growth between 2019 and 2025 of 5.7 million b/d, compared with a forecast of 5.8 million b/d in demand growth between 2019 and 2024 in last year's medium-term report.
"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," Birol said.
Referring to climate pressures on companies, he added: "The coronavirus crisis is adding to the uncertainties the global oil industry faces as it contemplates new investments and business strategies."