Feb 13, 2020 - Energy & Environment

Coronavirus throws oil demand into reverse for first time in a decade

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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.

How China is driving the plunging demand for oil amid coronavirus slowdown

Data: IEA; Chart: Axios Visuals

A big reason the novel coronavirus-fueled economic slowdown is hammering oil demand is because China — the center of the outbreak — has grown into such a powerhouse petroleum consumer.

What they're saying: The International Energy Agency's executive director Fatih Birol said China's slowdown is a key reason why the organization is slated to announce a major downward revision in this year's global oil demand estimates next week. Last year China accounted for 80% of total global oil demand growth, he said.

Go deeper: The global scramble to contain the coronavirus

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.