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Outlook: Global demand for oil in 2020 to see historic decline

By
Don Jacobson
Gasoline sells for $1.39 per gallon at a gas station in St. Louis, Mo., on April 1. The coronavirus crisis has fueled a significant decline in demand for oil and gasoline. File Photo by Bill Greenblatt/UPI
Gasoline sells for $1.39 per gallon at a gas station in St. Louis, Mo., on April 1. The coronavirus crisis has fueled a significant decline in demand for oil and gasoline. File Photo by Bill Greenblatt/UPI | License Photo

May 14 (UPI) -- The International Energy Agency said in an outlook Thursday it expects global oil demand to decline by 8.6 million barrels a day for 2020, a drop fueled by the coronavirus crisis.

The IEA said in its monthly oil market report a "gradual-but-fragile recovery" has already started after oil prices reached record lows in April. However, it notes, global production is still expected to fall to a nine-year low of 88 million barrels per day for the month of May.

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Restrictions on air travel and stay-home orders have had a tremendous impact on demand for oil.

For the year, the agency said, the anticipated decline in demand -- to about 91 million barrels a day -- would be the largest in history. The expected demand is almost 1 million barrels per day higher than the IEA said in its last outlook.

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The report said the modest recovery in oil prices so far is due to some easing coronavirus restrictions in travel sectors. The agency also cited steep production declines in non-OPEC countries as a factor.

"The outlook has improved somewhat and prices, while still far below where they were before the start of the COVID-19 crisis, have rebounded from their April lows," the IEA said in a statement.

OPEC+ nations agreed last month to cut production by 9.7 million barrels per day and Saudi Arabia has indicated it will curb production by an additional 1 million barrels in June.

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Prices for Brent crude and West Texas Intermediate oil remain more than 50 percent below their levels in late 2019.

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