![]() ![]() Efforts to improve the sustainability of the plastics industry will run up against the steady increase in demand from consumers in developing countries. Petrochemicals become an ever more important driver, with naphtha, liquefied petroleum gas (LPG) and ethane responsible for half of all growth. Between 20, global oil demand is forecast to grow at an average annual rate of just below 1 mb/d. Looking beyond the short term, the oil market looks comfortably supplied through 2025.įollowing a contraction in 2020 and an expected sharp rebound in 2021, global oil demand growth is set to weaken as consumption of transport fuels increases more slowly. Even before the coronavirus, markets had been over-supplied, leading OPEC+ producers to cut output. Production losses from Iran, Libya and Venezuela have reached a combined 3.5 mb/d since the start of 2018. On the supply side, geopolitics remain a wild card. Refining capacity additions in recent years have outstripped demand growth, bringing tough competition for an industry already challenged by tightening product specifications, most notably the new International Maritime Organisation (IMO) bunker rules introduced at the beginning of 2020. On the demand side, growth in 2019 was significantly weaker than expected and new vehicle efficiency measures have started to weigh on transport fuels. The arrival of the coronavirus is rattling a global oil market that was already facing challenges. These alternatives are outlined in the March edition of the IEA’s monthly Oil Market Report, which is released in tandem with this medium-term report. At the time of publication, the high uncertainty over the course of the global epidemic has led us to propose two alternatives to our base case for demand in 2020: a more pessimistic one in which global measures are less successful in containing the virus, and an optimistic case in which it is contained quickly. Ultimately, the outlook for the oil market will 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. For 2020 as a whole, the magnitude of the drop in the first half leads to a decline in global oil demand of around 90,000 barrels a day compared with 2019. A progressive recovery takes place through the second half of 2020. ![]() In the second quarter, an improving situation in China offsets deteriorating demand elsewhere. In this case, oil demand in China suffers the most in the first quarter, with a year-on-year fall of 1.8 million barrels per day (mb/d). However, demand from the aviation sector will continue to suffer from the contraction in global air travel. Containment measures imposed in North America, Europe and elsewhere are expected to have a smaller impact on oil demand than those in China. In this base case, we assume that although the virus is brought under control in China by the end of the first quarter, the number of cases rises in many other countries. To construct a base case for oil demand in 2020, this report draws on a wide range of data sources, including initial data for transport fuel demand, the most affected sector, and recently revised global GDP estimates by the Organisation for Economic Co-operation and Development (OECD). The situation remains very fluid, however, making it extremely difficult to assess the full impact of the virus. In 2020, global oil demand is expected to contract for the first time since the global recession of 2009. The outbreak of the new coronavirus (COVID-19) has added a major layer of uncertainty to the oil market outlook at the start of the forecast period covered by this report. ![]()
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