Because of Corona ... the first decline in global demand for oil since the financial crisis

The International Energy Agency announced today, Thursday, that the global demand for oil will decline in the current quarter for the first time since the financial crisis in 2009, due to the outbreak of the Corona virus in China.

"The consequences of Covid-19 for global oil demand will be significant," the agency said in a report. Covid-19 is the new scientific name for the virus.

The Paris-based agency added that "global demand has been affected by the spread of the Coruna virus and the broad closure of the Chinese economy."

While the agency still expects oil demand to grow this year as the virus is contained, it has reduced its forecasts for an increase in global consumption by about a third to 825,000 bpd, the lowest increase since 2011, adding that it assumes economic activity is gradually returning to normal from the second quarter .

Expectations
The agency expected the growth of demand for oil in the second quarter to 1.2 million barrels per day, then returning to normal in the third quarter with a growth of 1.5 million barrels per day in light of expected stimulus measures from China.

"China was responsible for about three-quarters of the growth in global oil demand last year. Before the Covid-19 outbreak, it was expected to drive more than a third of global oil consumption growth in 2020, but now we think it will be less than a fifth," she said.

Demand for OPEC oil
The agency expected demand for OPEC to decline in oil production, while US corporate production growth may not be affected until later in the year, Reuters reported.

She stressed that OPEC production fell in January to its lowest levels since the global recession in 2008, as closures reduced Libya's exports while the UAE curbed its production.

"Covid-19 could hit demand hard in the first half, and producers are under pressure to make further cuts," the agency said.

OPEC, Russia and other producers - within the framework of the OPEC Plus coalition - had agreed to cut production by 1.7 million barrels per day until the end of March to support the market.

OPEC Plus is considering holding an extraordinary meeting to consider deepening the cuts, sources said.

The situation in China and the world
Although markets recovered in recent days after investors became confident that China could contain the virus quickly, and that its economic impact would be short-lived, the International Energy Agency warned against complacency and comparing today's crisis with the spread of SARS in 2003.

"Although China has adopted measures to reduce the spread of the virus faster and more thoroughly than it adopted to counter the SARS virus, the major shift in the global economy since 2003 means that China's slowdown today will have a stronger global impact," according to the French Press Agency.

The International Energy Agency noted that since 2003, China has become more integrated in global supply chains, its tourism sector has expanded significantly, the Chinese have become the largest group of tourists in the world, and the country's share of global GDP has jumped from 4% to 16%.

She said that Chinese oil refining companies will reduce operating rates by 1.1 million barrels per day in the first quarter, and productivity will decrease in 2020 by 500 thousand barrels per day on an annual basis. She added that global employment rates will increase by no more than 700,000 bpd in 2020.

The agency lowered its forecast for China's GDP growth in the first quarter of this year by 1.5 percentage points to 4.5 percent. It also lowered by more than 0.5 percentage points its growth forecast for China's trading partners in the region, as well as the United States and Russia.