Global oil supply fell by 580 thousand barrels per day (kb/d) to stand at 99.96 million barrels per day (mb/d) in February as production from Libya slowed to a trickle, according to the International Energy Agency’s (IEA) report on Monday.
Covid-19 (coronavirus) has spread beyond China and has weakened global oil demand. As a result, the oil demand forecast detailed in the IEA's 2020 base case has been cut by 1.1 million barrels per day (mb/d), the IEA's monthly oil report shows.
"For the first time since 2009, demand is expected to fall year-on-year, by 90 kb/d," the report said and added that at the same time, the world’s oil production capacity is expected to rise by 5.9 mb/d.
In the past few weeks, Covid-19 has gone from being a Chinese health crisis to a global health emergency. While China has taken strong measures in response to the outbreak, the situation appears to be worsening around the world, with more than 60 countries reporting cases.
"The impact on the world economy is becoming more apparent, and growth estimates for this year are being downgraded," the report said.
The report also detailed that robust non-OPEC supply gains of 2.1 mb/d in 2020 and a contraction in demand has cut the call on OPEC crude to 27.3 mb/d.
To account for the extreme uncertainty facing energy markets, the IEA has developed two other 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," the IEA stated.
By Gulsen Cagatay