IEA sees first quarterly drop in oil demand of more than 10 years

the Demand for oil will decrease in the first quarter for first time in over 10 years due to the effects of the outbreak of the coronavirus in China, said the International energy Agency (IEA).

In the first quarter of 2020 the demand for oil is expected to decrease by 435 thousand barrels per day compared to the same period last year, reads the monthly report of the IEA’s oil market.

In the second quarter, according to Agency estimates, demand will increase by 1.2 million barrels per day. In the third quarter, demand growth is projected to accelerate to 1.5 million barrels per day due to probable of economic incentive measures in China.

IEA has lowered the forecast demand for 2020 to 365 thousand barrels per day to 825 thousand barrels per day, which is the lowest rate since 2011. Lower-than-expected consumption in the OECD has reduced growth in 2019 to 885 thousand barrels per day, according to the report.

the Volume of OPEC oil production in January fell to the lowest level since the global recession of 2009, as Libyan exports fell due to the blockade of oil terminals, and the UAE have cut production, said the IEA.

“Because [coronavirus] Covid-19 could potentially be hit hard by the demand in the first half of the year, producers have to undertake further cuts,” reads the report.

the Technical Committee of the OPEC+ last week recommended to reduce production by another 600 thousand barrels per day, to support oil demand amid the spread of “Wuhan coronavirus”.