Oil demand in 2020 is expected to fall by 8.1 million barrels per day (mb/d), the largest in history, before recovering by 5.7 mb/d in 2021, the International Energy Agency (IEA) reported on Tuesday.
The IEA underlined that reduced jet and kerosene deliveries will impact total oil demand until at least 2022.
Global oil supply plunged by 11.8 mb/d in May, driven by a record OPEC+ oil production cut and economic shut-ins in the US, Canada and elsewhere, the IEA's monthly oil report shows.
Crude prices rose in May to the highest in three months as demand began to recover and global supply fell sharply, the agency stated and added that while the oil market remains fragile, the recent modest price recovery suggests that the first half of 2020 will end on a more optimistic note.
On the supply side, record output cuts from OPEC+ and steep declines from other non-OPEC producers saw global oil production fall by a massive 12 mb/d in May.
On the demand side, increased mobility indicators in the March-May period have shown support particularly when China made a strong exit from lockdown measures which saw demand in April almost rebound to past levels.
The IEA also hailed the contribution of OPEC allies in the oil cut pact to balance the market.
"So far, initiatives in the form of the OPEC+ agreement and the meeting of G20 energy ministers have made a major contribution to restoring stability to the market," the agency stated.
By Gulsen Cagatay