Global oil demand will be slightly lower than forecast this year in the wake of strict Covid lockdowns in China, the world’s biggest importer of crude, the International Energy Agency said Wednesday.
Russian oil supply, meanwhile, is expected to continue to fall in April by 1.5 million barrels per day amid its invasion of Ukraine, according to the IEA, which advises developed countries on their energy policies.
But increased output from the OPEC+ group of oil producing countries and stock releases from the United States and other IEA members “should prevent a sharp deficit from developing,” said the agency in a monthly report.
Rich countries have agreed to tap an additional 120 million barrels of oil from emergency reserves, with half from the United States, in a bid to calm crude prices that have soared following Russia’s February 24 invasion of Ukraine.
Prices fell below $100 in recent days as severe lockdowns in Shanghai raised concerns that crude demand from China would fall, only to rebound after officials eased restrictions in some neighborhoods of the country’s biggest city.
“Severe new lockdown measures amid surging Covid cases in China have led to a downward revision in our expectations for global oil demand” in the second quarter of 2022 and the year as a whole, the IEA said.
Weaker-than-expected demand in countries of the OECD — a group of mostly developed nations — added to the decline, the Paris-based agency said.
The IEA said it now expects demand to average 99.4 million barrels per day in 2022, 260,000 barrels per day lower than previously estimated, though it will still be higher than last year by 1.9 million barrels.