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The world oil demand growth forecast for 2020 is revised lower by 6.9 million barrels per day (mb/d), to a historical drop of around 6.8 mb/d, said OPEC in its monthly market report.
The contraction in the second quarter (2Q) of this year is expected to be around 12 mb/d, with April witnessing the worst contraction at about 20 mb/d, it added.
The impact of the Covid-19 outbreak in China in 1Q20, and its negative impact on transportation and industrial fuels in the country, has since spread globally and is now affecting oil demand growth in most other countries and regions, with an unprecedented impact on global oil demand, transportation fuels in particular.
As a result, OECD oil demand is revised lower by 3.7 mb/d to decline by 4.0 mb/d, while non-OECD oil demand growth is adjusted lower by 3.2 mb/d to contract by 2.9 mb/d for the year.
Considering latest developments, and the large uncertainties going forward, downward risks remain significant, suggesting possibility of further adjustments, especially in the 2Q, should new data and further developments warrant revisions.
World oil supply
Non-OPEC oil supply growth in 2019 is revised down by 0.01 mb/d from the previous month’s assessment and is now estimated at 1.98 mb/d. For 2020, non-OPEC oil supply is forecast to decline by 1.50 mb/d, a downward revision of 3.26 mb/d from the previous projection.
The impact of Covid-19, ensuing global economic recession and oil demand shock, will also lead to supply disruptions. Benchmark oil prices plunge prompted companies to respond by cutting capital expenditure to the lowest in 13 years.
World economy
The world economy is forecast to face a severe recession in 2020, declining by 1.5 per cent, following global economic growth of 2.9 per cent in the previous year. Following tender signs of improvement at the beginning of the year, expectations for global economic growth were quickly burdened by the strong impact of the Covid-19 pandemic.
