Covid-19: IEA cuts global oil demand forecast for 2020 to 91.9 mn bpd

The global coronavirus pandemic is weighing heavily on worldwide demand for oil as the aviation and transport sectors, in particular, struggle with the fallout from the lockdowns aimed at reining in the disease, the International Energy Agency said Thursday.

"The Covid-19 pandemic has cast a long shadow over oil demand, which we now expect to fall by 8.1 million barrels per day year-on-year in 2020," the IEA wrote in its latest monthly report.

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Overall, the IEA cut its forecast for global oil demand for the whole of 2020 to 91.9 million barrels per day, the first downgrade in a number of months.

It said it expected demand to recover somewhat next year to 97.1 million bpd, though this would still be down on its previous forecast.

"We have revised down our 2021 demand estimate... as the aviation sector will likely take longer to recover," the report said.

"By December 2021, global oil consumption will still be two per cent lower than at the end of 2019."

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The aviation and road transport sectors, both essential components of oil consumption, were continuing to struggle, the IEA said.

Road transport was being impacted "as people avoid non-essential trips and working from home remains the norm in much of the West," the report said.

With countries largely keeping their borders closed and testing incoming passengers for Covid-19, "non-essential travel remains very limited, keeping air traffic well below normal levels."

That meant that the outlook for jet fuel demand "has worsened in recent weeks as the coronavirus has spread more widely," the IEA said.

While domestic travel had recovered in China and the United States, and the number of flights between European countries was increasing, "we estimate that global traffic was down around two-thirds from normal levels in July."

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That follows a drop of 75 per cent in June and 79 per cent in May.

"The northern hemisphere summer is normally the peak season for air travel, but this year's slow take-up indicates demand may remain suppressed for a while," the IEA said.

"Business travel will remain severely curtailed globally until a vaccine is found, while leisure travel will mainly be limited to domestic trips and short-haul flights."

It was also possible that business travel "will struggle to recover to pre-Covid-19 levels due to the success of video conferencing and to broad efforts to cut operating costs," the IEA said.