Travel, emissions, and manufacturing are down
The International Energy Agency (IEA) just released their latest oil market forecast this morning, and it expects global oil demand to decline this year as the impact of the new coronavirus (COVID-19) spreads around the world, constricting travel and broader economic activity.
The situation remains fluid, creating an extraordinary degree of uncertainty over what the full global impact of the virus will be. In the central base case, demand this year drops for the first time since 2009 because of the deep contraction in oil consumption in China, and major disruptions to global travel and trade.
The short-term outlook for the oil market will ultimately depend on how quickly governments move to contain the coronavirus outbreak, how successful their efforts are, and what lingering impact the global health crisis has on economic activity. All the details of the new forecast can be found in the March edition of the IEA Oil Market Report.
“The coronavirus crisis is affecting a wide range of energy markets – including coal, gas, and renewables – but its impact on oil markets is particularly severe because it is stopping people and goods from moving around, dealing a heavy blow to demand for transport fuels,” said Dr. Fatih Birol, the IEA’s Executive Director. “This is especially true in China, the largest energy consumer in the world, which accounted for more than 80% of global oil demand growth last year. While the repercussions of the virus are spreading to other parts of the world, what happens in China will have major implications for global energy and oil markets.”
The extended five-year forecast on oil markets, Oil 2020, was also released this morning.
IEA Executive Director in Washington DC
Dr. Birol visited Washington DC last week, testifying before the US Senate Committee on Energy and Natural Resources, and meeting with US Energy Secretary Dan Brouillette. During his visit, he discussed a wide range of global energy issues, including clean energy transitions and the implications of the coronavirus outbreak. He highlighted US leadership in energy security and innovation, noting recent IEA data showing the United States has reduced its energy-related CO2 emissions by more than any other country over the past two decades.
With Secretary Brouillette, Dr. Birol discussed the coronavirus impact and also the upcoming IEA Clean Energy Transitions Summit, which will take place in Paris on 9 July. You can watch the video of their joint news conference.
In addition to the base case described above, and to account for the extreme uncertainty facing energy markets, the IEA has developed two additional scenarios for how global oil demand could evolve this year.
In a more pessimistic low case, global measures fail to contain the virus, and global demand falls by 730,000 barrels a day in 2020. In a more optimistic high case, the virus is contained quickly around the world, and global demand grows by 480,000 barrels a day.
Global oil demand is expected to decline in 2020 as the impact of the new coronavirus spreads around the world, yet the situation remains fluid, creating an extraordinary degree of uncertainty over what the full global impact of the virus will be.
The decline in emissions in China is visible from space
The satellites of the European Copernicus agency have registered a drop in nitrogen dioxide levels in China’s atmosphere. The data was collected by NASA’s ground observation team using the Ozone Monitoring Instrument (IMO) of NASA’s Aura mission that was launched in 2004 to collect global data on NO2 and various air pollutants.