Sat. Feb 22nd, 2020

Coronavirus will subtract 20% of the growth in oil demand

The epidemic of coronavirus will cause the increase of the consumption of Petroleum In 2020, it is 19% lower than the one calculated so far, the Organization of Exporting Countries said on Wednesday Petroleum (OPEC) in a report that warns that the impact of this crisis has added uncertainties on the progress of the global economy.

“The main reason after this review of the growth in demand is the coronavirus outbreak and its expected impact on the demand for oil from China and, by extension, the world,” said the energy group in its market analysis, published on Wednesday in Vienna

In 2020

The fall in Chinese demand explains the decline

The new OPEC calculation places global oil consumption during this year at 100.73 million barrels per day (mbd), 230,000 barrels per day less than the estimate made last month, before the outbreak of the epidemic that has already caused More than 1,000 dead.

“The growth in demand for oil in China is expected to slow down compared to last year, reflecting lower economic activity,” the report says, noting that changes in fuel consumption for transportation, especially aerial, are especially important in the review. .

At the time of the outbreak of the explosion millions of Chinese were traveling to visit their families for the lunar New Year festivities, which “has exacerbated the impact on transport fuel demand.” A “significant” impact on the industry is also expected.

Oil and gas facilities in a port in Zhuhai, China

Oil and gas facilities in a port in Zhuhai, China
(Aly Song / Reuters)

Thus, OPEC notes that Chinese demand, one of the main consumers of crude oil on the planet, will be in the first half of the year about 200,000 barrels a day less than expected so far. Throughout the year, China will burn, according to the updated calculation, 1.74% more crude than in 2019, a considerable slowdown if it is considered that the annual growth last year was 2.73%.

In total, world demand of 100.73 MBD, despite being lower than calculated so far, assumes that the world will burn 990,000 barrels per day, or 0.99%, more than in 2020 this year.

However, China will continue to be the second most consumed country, behind only the United States. The industrialized countries of Europe, on the other hand, will reduce one more year, this time by 0.33%, their demand, which will fall to 14.29 MBD, due, among other factors, to fuel replacement policies.


Greater uncertainty in world growth

“The impact of the coronavirus outbreak on China’s economy has added uncertainties around global economic growth in 2020, and by extension, the growth in demand for crude oil,” says OPEC, who indicates that it will be necessary to continuously monitor the development of the situation to gauge the implications in the oil market this year.

OPEC headquarters in Vienna

OPEC headquarters in Vienna
(Leonhard Foeger / Reuters)

In general, OPEC believes that the world economy will grow 3% in 2020, compared to the 3.1% expected last month and explains that revision, in addition to the coronavirus, in a weakening of the economy in both the European Union and in India.

Regarding the supply, the United States will continue to be the largest producer of crude oil, well above Russia and Saudi Arabia, driven by shale oil extractions, and is still on track to become a net exporter.

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