IEA Follows OPEC in Lowering Global Oil Demand Forecast for 2020

By Adedapo Adesanya

The International Energy Agency (IEA) lowered its global oil demand forecasts for the first time in several months as the number of COVID-19 infections remains high and amid ongoing weakness in the aviation sector.

In its monthly report, the IEA said it now sees global oil demand for 2020 at 91.1 million barrels per day, reflecting a fall of 8.1 million barrels per day.

This revised forecast is 140,000 barrels per day lower than the IEA’s previous projection.

The agency also revised down its 2021 global oil demand estimate by 240,000 barrels per day to 97.1 million barrels per day, with jet fuel demand identified as the “major source” of weakness.

The IEA said new infections are interrupting mobility and pointed to the easing in lockdown that has fuelled the resurgence of COVID-19 cases around the world.

This came a day after the Organisation of the Petroleum Exporting Countries (OPEC cut its outlook for global oil demand. The oil cabal, which accounts for roughly a third of total world oil output, expects demand growth to drop by 9.1 million barrels per day this year, marking a decline of 100,000 barrels per day from its last forecast.

Oil production rose in the US, Canada, and Brazil, while the OPEC+ countries, which agreed to jointly curtail output for several months this year, eased their self-imposed restrictions, the IEA said.

It was noted that if OPEC+ countries that have not complied with their quotas cut back by enough to bring them into compliance, global oil supply would not necessarily increase significantly.

Despite this outlook, the price of OPEC basket of crudes appreciated to $45.34 a barrel on Thursday, compared with $45.08 the previous day, according to OPEC Secretariat calculations released on Friday.

The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Djeno (Congo), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).