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Thursday, February 13, 2020
In a monthly report, the International Energy Agency (IEA) said global oil demand will suffer its first quarterly drop in a decade as the COVID-19 virus (Corona Virus) pummels the economy in China and its impact reverberates throughout the world.
“Global oil demand has been hit hard by the novel coronavirus (COVID-19) and the widespread shutdown of China’s economy,” the report stated, adding, “Demand is now expected to fall by 435,000 barrels year-on-year in the first quarter of 2020, the first quarterly contraction in more than 10 years” when it dropped during the global economic crisis.”
The IEA believes that the market will see an over supply as China is one of the world’s largest consumers and will have an effect on oil producers. The IEA estimates that the demand for OPEC crude has dropped from 29.4 million bpd Q4 2019 to 27.2 million bpd in the first three months of 2020.
The spread of the Corona Virus continues to expand with thousands of new cases in the last few days and the death toll continues to rise. Efforts to contain the outbreak are slowing productivity in China with widespread quarantines and a shut down of major operating centers. Experts estimate it could take up to a year to come up with an effective vaccine.
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