"Concerns Over Lowest Oil Consumption in 4 Years if COVID-19 Prolongs in US and Europe"

Despite Early Stabilization in the US and Europe, Daily Average Oil Demand Expected to Decrease by 1.5 Million Barrels
Korea Petroleum Association Analyzes with Reference to IEA and IEEJ Special Reports

[Asia Economy Reporter Hwang Yoon-joo] An analysis has emerged suggesting that if the United States and Europe fail to contain the novel coronavirus infection (COVID-19) outbreak early, oil consumption (based on daily average) this year could fall to its lowest level in four years. Even if the COVID-19 situation stabilizes by next month, demand for petroleum products this year is expected to decrease by at least 1.5 million barrels per day compared to last year.

The Korea Petroleum Association's Future Strategy Team announced this on the 14th through a report titled "Analysis of the Impact of COVID-19 on Global Oil, Natural Gas, and Liquefied Natural Gas (LNG) Demand." The report was based on a special report released on the 23rd of last month by the International Energy Agency (IEA) and the Institute of Energy Economics, Japan (IEEJ).

According to the report, global oil demand averaged 98.1 million barrels per day in 2017, 99.2 million barrels per day in 2018, and reached 100 million barrels per day last year. The forecast for this year was 101.1 million barrels per day, a 1.1% increase from the previous year. However, due to the COVID-19 pandemic causing a sharp decline in oil consumption, this forecast is expected to be missed.

Firstly, if the number of COVID-19 cases in the United States and Europe peaks and prolongs until July, global oil demand is expected to drop to 97.4 million barrels per day. This represents a decrease of 3.7 million barrels per day (-3.7%) from the original forecast for this year, marking the lowest level in four years since 2017.

In particular, the report anticipates that if the COVID-19 situation prolongs, the oversupply will worsen despite the production cut agreement by OPEC+ (the Organization of the Petroleum Exporting Countries (OPEC) member countries and non-OPEC cooperating countries). The report analyzed, "If COVID-19 prolongs, in the third quarter, demand could decrease by up to 4.8 million barrels per day compared to the existing forecast, and a significant negative figure will be recorded in the fourth quarter as well."

Even if the United States and Europe manage to contain the COVID-19 outbreak by May, global oil demand is expected to decrease by at least 1.5 million barrels per day. The report projected, "Even if stabilization occurs early next month, global oil consumption will remain at about 99.6 million barrels per day, which is 1.5 million barrels less than the expected daily average of 101.1 million barrels this year."

The report stated that if oil consumption decreases due to the COVID-19 outbreak, the global economic growth rate and quarterly global gross domestic product (GDP) will also decline.

If the COVID-19 situation in Europe and the United States prolongs, the global economic growth rate is expected to plummet from the existing 2.8% to -0.7%, and global GDP is also forecasted to record negative growth.

If the COVID-19 situation stabilizes early, the global economic growth rate is expected to remain at about half of the previous forecast at 1.4%, and global GDP is anticipated to turn positive only by the fourth quarter.

This content was produced with the assistance of AI translation services.