IEA cuts 2020 oil demand forecast by 140,000 bpd over aviation sector woes

Topics IEA | Oil demand | Aviation sector

The International Energy Agency (IEA) cut its 2020 oil demand forecast on Thursday, warning that reduced air travel due to the coronavirus pandemic would lower global oil demand this year by 8.1 million barrels per day (bpd).

The Paris-based IEA slashed its 2020 outlook by 140,000 bpd to 91.9 million bpd, its first downgrade in several months.

"Jet fuel demand remains the major source of weakness," the IEA said in its monthly report.

"In April the number of aviation kilometres travelled was nearly 80% down on last year and in July the deficit was still 67% ... The aviation and road transport sectors, both essential components of oil consumption, are continuing to struggle."

Damage to demand wrought by less cross-border travel was mitigated somewhat by recovery in industry and e-commerce that was supporting trucking, but the IEA still predicted 2021 oil consumption would be slightly lower than in 2019.

ALSO READ: OPEC trims oil demand in 2020; recovery doubtful in 2021 on Covid-19

Data cited by the IEA indicated that mobility in many regions had reached a plateau but was increasing in Europe, though a rise in Covid-19 cases caused the agency to cut demand estimates for gasoline.

The agency said that while supply exceeded demand in June, uncertainty over future demand along with increased output by top producers means re-balancing oil markets will be "delicate".

Oil production was recovering in the United States, Canada and Brazil at the same time producers from the Organization of the Petroleum Exporting Countries and allies such as Russia, a group dubbed OPEC+, were easing their output cuts, the IEA said.

"However, if countries that have not hitherto complied with their quotas cut back by enough to bring them into compliance, global oil supply would not necessarily increase significantly," the IEA added, citing the United Arab Emirates and Iraq.



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel