International Energy Agency Lowered its Global Oil Forecasts

On Thursday, the International Energy Agency (IEA) lowered its global oil demand forecasts for the first time in several months.  The coronavirus pandemic, as well as problems connected with the aviation sector affected its forecasts.

A monthly report from the agency shows expectations of the global oil demand for 2020 to reach 91.1 million barrels per day. Interestingly, the revised forecast is 140,000 barrels per day lower compared to the International Energy Agency’s previous projection.

Furthermore, the agency also changed its forecast for the global oil demand in 2021. Based on the latest data, compared to the previous forecast, the IEA expects the demand to fall by 240,000 barrels to 97.1 million barrels per day.

Recently, the world’s largest oil and gas companies reported historic losses in the second quarter, due to the coronavirus pandemic. This fact, once more underlines the severity of the problem.

Coronavirus pandemic and oil demand

According to the IEA, coronavirus had a dramatic impact on oil demand. Importantly, aviation and transport, both essential components of oil consumption, are struggling to deal with problems due to the pandemic.

For example, mobility data for July showed that fuel demand remained below seasonal norms in Europe as well as North America. Moreover, mobility data for the last month showed that the situation is even more complicated in Latin America and India. It makes sense, as in both cases, the virus is continuing to spread fast, and as a result, people spend less time behind the wheel.

The number of coronavirus cases surpassed 2 million in India and 3 million in Brazil. It is not surprising that mobility data for July showed that fuel demand remained below seasonal norms in both countries.

Interestingly, oil supply rose by 2.5 million barrels per day to reach 90 million barrels per day in July. Saudi Arabia ended its voluntary production cut and the United Arab Emirates exceeded its OPEC+ target.