The International Energy Agency (IEA) cut its 2020 oil demand forecast on Thursday, warning that reduced air travel due to the coronavirus pandemic would lower global oil demand this year by 8.1 million barrels per day (bpd).
The Paris-based IEA slashed its 2020 outlook by 140,000 bpd to 91.9 million bpd, its first downgrade in several months.
“Jet fuel demand remains the major source of weakness,” the IEA said in its monthly report.
“In April the number of aviation kilometres travelled was nearly 80% down on last year and in July the deficit was still 67% ... The aviation and road transport sectors, both essential components of oil consumption, are continuing to struggle.”
The agency said that while supply exceeded demand in June, uncertainty over future demand along with increased output by top producers means re-balancing oil markets will be “delicate”.
Oil production was recovering in the United States, Canada and Brazil at the same time producers from the Organization of the Petroleum Exporting Countries and allies such as Russia, a group dubbed OPEC+, were easing their output cuts, the IEA said.
“However, if countries that have not hitherto complied with their quotas cut back by enough to bring them into compliance, global oil supply would not necessarily increase significantly,” the IEA added.