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Global oil demand is set to crash by 7.9 million barrels per day (bpd) this year, the International Energy Agency (IEA) said on Friday, but this forecast is slightly more optimistic than last month’s expectation of an 8.1-million-bpd demand drop.
The IEA, however, noted that the recent rise in COVID-19 cases and the reinstating of partial lockdowns in some countries continue to weigh with uncertainty on the world’s global oil demand in 2020.
This year, the world is expected to consume an average of 92.1 million bpd of oil, compared to the typical demand of 100 million bpd, the IEA said in its Monthly Oil Market report.
The lowered projection for demand loss is mainly attributed to the Q2 demand decline turning out to be less severe than initially expected.
According to the IEA, global oil demand dropped by 16.4 million bpd in Q2 year over year, which, albeit quite a crash, was less than expected.
Moreover, demand rebounded strongly in the top crude oil importers in Asia – China and India – in May, rising by 700,000 bpd and 1.1 million bpd, respectively, month over month, the Paris-based agency noted.
Since May, the IEA has been consistently reducing the forecast for this year’s demand loss. In the June Oil Market Report, the agency expected 2020 demand to drop by 8.1 million bpd, an improvement from the forecasts from April (9.3 million bpd drop) and May (8.6 million bpd slump).
In terms of supply, the agency estimates that global oil supply dropped by 2.4 million bpd in June to its lowest level in nine years – 86.9 million bpd.
“While the oil market has undoubtedly made progress since 'Black April,' the large, and in some countries, accelerating number of Covid-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside,” the IEA said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.