OPEC "Global Oil Demand to Decrease by 9.1% Due to COVID-19 Impact"

Published 14 May.2020 19:41(KST)

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] The Organization of the Petroleum Exporting Countries (OPEC) forecasted on the 13th (local time) that global crude oil demand will decline by 9.1% this year compared to last year due to the impact of the novel coronavirus disease (COVID-19).

In its monthly oil market outlook report released that day, OPEC projected this year's crude oil demand at an average of 90.59 million barrels per day. This is 9.08 million barrels per day (9.1%) less than the estimated average demand of 99.67 million barrels per day last year.

Considering that OPEC had forecasted in last month's monthly report that this year's crude oil demand would decrease by 6.85 million barrels per day compared to last year, the demand forecast has been lowered by an additional 2.23 million barrels per day within a month.

During March and April, when COVID-19 rapidly spread beyond China to the United States and Europe, there were speculations in the oil market that this year's crude oil demand could shrink by up to 30% (around 30 million barrels per day).

Meanwhile, OPEC projected that crude oil demand in the fourth quarter of this year will rise to 96.3 million barrels per day. This is a 4.5% decrease compared to the fourth quarter of last year (100.79 million barrels) and 3.4% lower than last year's average. This indicates that demand will not recover to pre-COVID-19 levels by the end of this year.

Looking at the regional decline rates in crude oil demand compared to last year, Europe (-13.5%) experienced the largest drop, followed by Asia (-11.5%), the Americas (including the United States, -9.1%), and the United States (-8.6%). In the report, OPEC stated, "Rapid supply adjustments to address the severe supply-demand imbalance in the oil market have already begun and are showing positive responses," expressing hope that "supply-demand balance will be quickly achieved within a few quarters."