International Energy Agency Predicts Drop In Global Oil Demand Growth
China accounted for over 75% of growth in global oil demand last year. However, the coronavirus outbreak has stalled production in Wuhan and in nearby factories, which is expected to lead to less growth in oil demand. The forecast is being made by the International Energy Agency. This is the first drop in global oil demand growth that the IEA has predicted over 10 years.
The slowdown in global oil demand growth for this upcoming year was decreased by 365,000 barrels a day and the forecast for this quarter was decreased by 435,000 barrels a day. At the time of the updated prediction, Brent crude increased by 1% to $56.34 a barrel.
“The consequences of [the virus] for global oil demand will be significant,” the IEA wrote. “There is already a major slowdown in oil consumption and the wider economy in China.”
Additionally, there has been a slowdown in oil production and a consequent decrease in supply. In its report, the IEA said that oil supply has decreased by 800,000 barrels a day. However, most of this reduction in supply is due to organized efforts by OPEC.