Fueled by coronavirus, global oil demand set to drop record amount
Illustration: Sarah Grillo/Axios
Global oil demand in the first quarter of 2020 is expected to decline by the largest amount in recorded history, IHS Markit projected Tuesday night.
Driving the news: The decline, which is set to exceed even what occurred in the 2009 financial crisis, is being driven by the spread of the novel coronavirus and subsequent stunted economic activity in China.
The big picture: The paramount concern of the coronavirus is not oil demand, of course, but its impact on humanity's health. Nearly 3,300 people around the world have died from the virus as of Tuesday, and over 92,000 people have been infected.
By the numbers: IHS Markit, a global consultancy, estimates that global oil demand will be 3.8 million barrels a day lower than a year earlier.
- This is 4.5 million barrels a day lower than previous estimates before the spread of the coronavirus.
- The previous biggest decline was in 2009 in the wake of the economic crash. Demand fell by 3.6 million barrels a day in the first quarter of that year.
- For context, the world today consumes a little less than a 100 million barrels a day.
One level deeper: Production from OPEC, the mostly Middle Eastern bloc of oil-producing nations, could continue to fall beneath its current 17-year low as buyers cut oil purchases through March and April, the report states.
- Gasoline and jet fuel in the country is especially affected by the coronavirus as the government restricts road travel and flights to and from China are suspended.
What they're saying: “This is a sudden, instant demand shock—and the scale of the decline is unprecedented,” said Jim Burkhard, vice president and head of oil markets, IHS Markit.
Between the lines, via Axios' Amy Harder: The thing that’s kicking the oil industry when it's down — the coronavirus and fears about it spreading — is also what canceled CERAWeek, its big annual confab, originally set for Houston next week.