Coronavirus could lead to a drastic reduction in demand estimates, says IEA

Coronavirus could lead to a drastic reduction in demand estimates, says IEA

BAKU, Azerbaijan, Feb.17

By Leman Zeynalova – Trend:

Coronavirus could lead to a drastic reduction in oil demand estimates, Keisuke Sadamori, Director for Energy Markets and Security at the International Energy Agency (IEA), told Trend

“Oil market is currently very well-supplied, and IEA’s Oil Market Report at the end of 2019 predicted strong stock build in the first half of 2020 due to continued robust non-OPEC supply growth. Recent Novel Coronavirus outbreak is expected to lower global oil demand substantially, and its impact is difficult to identify as the outbreak has not been contained yet,” said the Sadamori.

He noted that since the decision made by the OPEC+ countries in December to cut production for re-balancing the oil market, the coronavirus outbreak has had a significant impact on oil demand and prices have moved sharply lower.

The coronavirus crisis is very fast-moving and at this stage it is difficult to understand its scale, Sadamori explained.

“At the start of 2020 we saw tension in Iraq. We also saw the drastic reduction in oil production in Libya as the civil war intensified. These events reminded us that oil supply security cannot be taken for granted. Despite these concerns, the oil market was perceived to be well-supplied in the first half of the year, and as the year progressed stronger demand growth would gradually move the market towards balance. Now, the coronavirus is a major threat to oil demand and, depending on the very unpredictable path of the illness, it could lead to a drastic reduction in demand estimates. We have to see how the crisis develops before we can have a clear view about 2020,” he said.

He pointed out that the IEA closely follows developments in global oil markets and each month the organization publishes the leading analysis of market trends.

“This enables companies, governments and other analysts to take decisions that enable them to meet their challenges. The IEA specifically monitors threats to oil supply security, and, as was the case after the attacks on Saudi Arabia in September 2019, stands ready to advise its member governments on any steps that might need to be taken. Longer term, the Agency is looking at the role of the major oil and gas companies in meeting the challenge of climate change and in January we published a major report on this subject,” said Sadamori.

The outbreak in the Chinese city of Wuhan - which is an international transport hub - began at a fish market in late December 2019. Since then over 1,000 people have died and over 45,000 people have been confirmed as infected.

Some sources claim the coronavirus (or COVID-19) outbreak started as early as November 2019.

Aside from Mainland China, the cases of coronavirus spreading have also been confirmed in Japan, Singapore, Thailand, South Korea, Hong Kong, Australia, Germany, the US, Malaysia, Taiwan, Vietnam, Macau, France, Canada, the UAE, India, Italy, Russia, Philippines, the UK, Nepal, Cambodia, Belgium, Spain, Finland, Sweden and Sri Lanka.

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Follow the author on Twitter: @Lyaman_Zeyn

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