China is the main industrial hub in the world. Moreover, it is one of the biggest oil consumers around the globe. However, the coronavirus outbreak is a severe challenge for the local as well as the global economy.
The International Energy Agency released its March oil market report. According to this report, global oil demand could fall by as much as 730,000 barrels a day in 2020 in a worst-case scenario. This might happen if the outbreak continues to spread around the world, and China’s need for oil will remain lower.
It is important to mention that the International Energy Agency monitors energy markets for the world’s most advanced economies. Moreover, the Paris-based agency expects that in a best-case scenario, oil demand will fall around 90,000 barrels a day. This might happen if China’s economy improves in the second quarter.
The agency expects that oil demand will fall for the first time since 2009. This will be the first-year decline in more than a decade. In 2019, China accounted for more than 80% of global oil demand growth.
Moreover, the Organization for Economic Cooperation and Development expects the coronavirus outbreak to slash world economic growth in 2020.
The global economy and a Virus outbreak
Coronavirus outbreak is a major challenge for the oil industry. Unfortunately, the coronavirus pandemic infected more than 108,000 people and killed more than 3,600. Chinese authorities-imposed travel restrictions to contain the virus. Nevertheless, the virus reached all regions of China.
Moreover, due to the visible decline in transport, industrial and commercial activity oil demand may fall by 2.5 million barrels per day in the first quarter. As a result, oil demand will decline significantly in comparison with the same period in 2019. Interestingly, China would account for 1.8 million barrels a day.
Governments around the world should work harder to contain the coronavirus outbreak. Another challenge for private and governmental organizations is to limit the impact of the outbreak on the global economy.