Mar 13, 2020 - Energy & Environment

Coronavirus could drive down global oil consumption in 2020

Illustration: Aïda Amer/Axios

A number of forecasts show global oil consumption dropping this year for the first time since the financial crisis over a decade ago as the coronavirus outbreak prevents travel and stymies other economic activity.

What they're saying: The firm Rystad Energy, in a note yesterday, says it now projects global oil demand to fall by 600,000 barrels per day year-over-year — the world uses roughly 99 million barrels of oil per day — compared to 2019 levels.

  • The firm sees jet fuel demand dropping 11% this year and road fuel demand staying flat instead of growing.
  • Goldman Sachs analysts, in a note last night, now see global oil demand falling 310,000 barrels per day in 2020 compared to last year.

S&P Global Platts Analytics has a "base case" that still sees demand growth this year but also modeled a "global epidemic" scenario that shows a reduction of 975,000 barrels a day compared to last year.

The International Energy Agency estimated a drop of 90,000 barrels per day, but in their "pessimistic" case it swells to 730,000.

The bottom line: While it has long been apparent that the outbreak has thrown oil demand into reverse for the early part of 2020, analysts increasingly see the outbreak as deep and long-lasting enough to argue that oil consumption will also fall across the whole year.

Go deeper: Fueled by coronavirus, global oil demand set to drop record amount

Go deeper

OPEC-Russia oil price war escalates as Saudi Aramco announces supply increase

Data: Money.net; Chart: Andrew Witherspoon/Axios

The new oil price war escalated Tuesday as Saudi state oil giant Aramco announced, per reports in Reuters and elsewhere, that it plans to supply the market with 12.3 million barrels per day starting next month.

Why it matters: The increase underscores how the lunge for market share with the collapse of the OPEC+ agreement is going to create financial pain and problems for producers and governments worldwide.

The fallout from oil's collapse

Data: Yahoo Finance; Chart: Axios Visuals

ExxonMobil, citing an "unprecedented environment," said last night that it plans to "significantly" cut spending in light of the coronavirus and the collapse in oil prices.

Why it matters: The oil giant's announcement is the latest sign of how deeply the upended market is affecting the sector.

Trump to buy oil for nation’s strategic reserves

President Trump. Photo: The Washington Post / Contributor

President Trump will direct the Energy Department to buy oil for the nation’s strategic stockpile to boost prices and help the oil industry reeling after the market’s historic collapse this week.

The big picture: America’s Strategic Petroleum Reserve was created in the 1970s to ensure the U.S. has oil in case of an emergency. Today, Trump is buying oil for the reserve because of an emergency.