Persistent damage to the global economy from the coronavirus pandemic will hollow out demand for oil more than previously thought, major industry figures said on Monday.
The Organization of the Petroleum Exporting Countries (OPEC), energy giant BP and commodities trading giant Vitol all made grim forecasts as rising rates of COVID-19 infections sap hopes for quick recovery.
OPEC said in its monthly report that world oil demand would fall by 9.46 million barrels per day (bpd) this year, a decline sharper by 400,000 bpd than predicted in August.
The producer club bumped up its forecast slightly for developed countries, but cut its outlook for Asian countries beyond China “on the back of a slowdown in economic activity due to the rising COVID-19 infection cases”.
BP, in its annual energy outlook projected that in its most conservative scenario, the pandemic would slash oil demand by about 3 million bpd by 2025 and 2 million bpd by 2050.
In two more aggressive scenarios modelling two more rapid global pivots away from fossil fuels, the demand erosion would be far deeper.
Vitol Chief Executive Russell Hardy sounded a more positive note, telling a global petroleum conference that after oil storage peaks at the nadir of the pandemic, the market was “slowly chewing through that excess inventory”.
But the trading house’s global head of research Giovanni Serio said that a dent in demand caused by a continuing rise in cases or a second wave presents “the most likely shock that the oil market needs to be considering in the next 12 to 24 months”.
The International Energy Agency is set to update its projections for global oil demand in its monthly report due on Tuesday, after an IEA official said this month that the market appeared to be stuck between a stalled recovery and the absence of any major new lockdowns.
