Oil: in the midst of the coronavirus crisis, global demand is collapsing

World consumption of black gold fell and returned to its 1995 level in April. REUTERS / Afolabi Sotunde

Text by: Myriam Berber

The coronavirus also destroys global demand for oil. It has already dropped by 30% and should return to its 1995 level in April. This is indicated on Wednesday April 15, 2020 by the International Energy Agency (IEA) in its monthly report . Oil is suffering the backlash of global economic paralysis.

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Nearly four billion people confined, industries and transport stopped. It was one of the worst years for oil. The forecasts of the International Energy Agency (IEA) are alarming. Global demand will suffer a historic collapse of 9.3 million barrels a day this year. The Agency anticipates, of course, a resumption of demand in the second half. But it will be progressive.

Since the start of the coronavirus crisis, oil prices have declined sharply and inventories are piling up. The two reference prices, Brent from the North Sea for Europe and WTI for the United States, have lost more than 30% since the start of the year. Brent barely exceeds 30 dollars. Black gold is being hit hard by the effects of the coronavirus (Covid-19) and the slowdown in global economic activity.

Increase in strategic reserves

Faced with falling prices, the Organization of the Petroleum Exporting Countries (OPEC), and its partners, including Russia, finally agreed to reduce their supply . They will drop their production by 9.7 million barrels a day.

Another potential boost for the sector, the swelling of their strategic oil reserves by China, India or the United States, anxious to take advantage of very low prices. Transfers to these strategic reserves could reach up to 200 million barrels and should take place in the next three months. Will this be enough to rebalance the market? It will undoubtedly have to wait for deconfinement and the gradual return of activity to relaunch oil consumption.

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