IEA cuts global oil demand forecast on China weakness

The International Energy Agency has lowered its global oil demand forecast due to a rise in the number of coronavirus infections in China and weaker-than-expected demand in the US and other developed countries.

The energy watchdog now expects demand to average 99.4 million bpd this year, down from its previous estimate of 99.7 million bpd in March.

“Strict shutdowns in China have prompted us to further revise our oil demand estimates for the second quarter and the third quarter,” the Paris-based group said in its monthly oil market report on Wednesday. whole year”.

“Additionally, more complete demand data for the first quarter of 2022, particularly in the US, is much lower than preliminary estimates.”

The oil market has been extremely volatile since Russia’s invasion of Ukraine on February 24. Prices surged due to concerns about falling Russian supplies and huge reserves of major energy consuming nations, including the US.

Brent crude, the international benchmark, last month hit nearly $140 a barrel in frantic trading as the market tries to gauge the impact of the war on Russia’s vast oil industry. It then backed off when the United States and other IEA member countries announced plans to release 240 million barrels from their strategic stockpiles over the next six months.

Brent fell below $100 a barrel on Monday but then rebounded to trade at $105 on Wednesday.

The IEA expects Russian oil supplies to fall by 1.5 million bpd in April and forecasts up to 3 million bpd could be disrupted from May due to “international sanctions and as impact of the extended customer embargo in effect”.

The IEA said weaker demand, the release of large stockpiles by members and steady output from Opec and its allies would prevent a “strong deficit” from developing in the oil market despite supplies. of Russia decreased. However, it warned that the outlook was “middled in uncertainty”.

The IEA’s latest share issue provides an important stepping stone to oil markets and much-needed relief for consuming countries.

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