The International Energy Agency (IEA) released its new report. According to this report, the agency expects global energy demand to fall this in 2020. Moreover, the Paris-based agency expects the biggest drop since World War Two.
Billions of people more precisely 4.2 billion people around the globe are subjected to some form of lockdown due to the coronavirus pandemic. The purpose of such measures is to slow the spread of the virus.
According to the information provided by IEA, the global demand is going to fall by 6% in 2020. Unfortunately, in absolute terms, it will be the largest fall on record. Moreover, percentage-wise, it will be the steepest decline in 70 years.
Furthermore, the demand hit due to the coronavirus pandemic is expected to be seven times greater compared with the aftermath of the financial crisis in 2008. This information once more underlines the severity of the problem.
For example, to have a better understanding of the situation. It is possible to compare the demand hit caused by the coronavirus with the entire energy demand in India. Thus, in absolute terms, the decline is unprecedented as India is the world’s third-largest energy consumer.
However, people should take into account that, projections stated above comes from the assumption that governments will ease the restrictions in the following months. Hopefully, under a faster scenario, the global demand could fall by 3.8%.
Nevertheless, a possible second wave of infections could cause even bigger problems.
Energy demand and risk factors
In the first quarter of 2020, energy demand fell 3.9% year-on-year. Cheaper gas prices, as well as warmer temperatures, also affected the demand.
Moreover, people should not forget about the main problem which was the coronavirus outbreak in China. This country has a coal-based economy and the economy came to a standstill.
The oil industry is also struggling to cope with the ongoing crisis. It makes sense as roughly 60% of global demand for crude comes from driving and flying. At the moment, most of the airports around the world are almost empty.
For example, the oil demand in March fell by a record 10.8 million barrels per day compared with the same period in 2019. Moreover, this month the IEA estimates that demand will ball by 29 million barrels per day in comparison with April 2019. As a result, there is a chance that oil demand in April 2020 will fall to the lowest level since 1995.
Furthermore, the IEA expects the electricity demand to decline to fall 5% for the full year. This report once more shows the extent of the economic impact on the global economy.