VIENNA – OPEC reduced on Wednesday its oil demand growth forecast by 19 percent in 2020 due to uncertainties in the global economy caused by the coronavirus.
“The impact of the coronavirus outbreak on China’s economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth in 2020,” the cartel of 13 oil-exporting nations said in a report published in Vienna.
The latest calculation placed global oil consumption during this year at 100.73 million barrels per day (mb/d), 0.23 mb/d less than the estimate made last month, before the outbreak that has caused more than 1,000 deaths.
“Oil demand growth in China in 2020 is forecast to slow down, year-on-year, reflecting lower economic activities,” the report said.
It also highlighted changes in fuel consumption for transportation, especially aviation, as particularly important in the review.
“Evidently, the timing of the outbreak exacerbated the impact on transportation fuel demand in China, as it coincided with the Chinese Lunar New Year holidays, as millions of Chinese return home to celebrate with family members and friends, or travel abroad,” OPEC added.
The report said the use of transportation fuel has largely driven the sustained growth in crude oil consumption in China.
It also noted that the outbreak has affected the industrial sector.
OPEC predicted Chinese demand, one of the main consumers of crude oil on the planet, will be reduced by 0.2 mb/d than previously expected in the first half of the year.
Throughout the year China was expected to use 1.74 percent more crude oil than in 2019, a considerable slow down compared to the annual growth last year which was 2.73 percent, according to the updated calculation.
China was predicted to continue to be the second-highest consumption country, behind the United States.
Industrialized countries in Europe were predicted to reduce their demand by 0.33 percent to 14.29 mb/d, due to other factors including fuel replacement policies.
In the Americas, demand was expected to rise by 0.7 percent to 25.84 mb/d.
OPEC said it will be need to continuously monitor the development of the coronavirus outbreak to gauge the implications in the oil market for the rest of the year.
Its technical committee and its allies (OPEC+), chaired by Saudi Arabia and Russia, recommended on Monday additional production cuts during the second quarter of the year to cope with the fall in oil demand.
OPEC and its allies agreed in December to cut 1.7 mb/d during 2020.
The slowdown in demand will directly affect OPEC’s market share, which was expected to fall to 29.3 mb/d, four percent less than last year.
OPEC also cited the outbreak as the main factor to consider when assessing the evolution of the world economy.
The report estimated the world economy will grow three percent in 2020, compared to 3.1 percent which was predicted last month.