Thursday 26 March 2020 6:55 pm

International Energy Agency chief warns oil demand could sink 20 per cent

Global demand for oil could fall by 20 per cent as 3 billion people around the world live in lockdown.

Head of the International Energy Agency Fatih Birol, who made this prediction, also called on Saudi Arabia to rectify the situation.

Brent crude, currently at $26 a barrel, has been driven to record lows because of coronavirus eroding demand and the Russia Saudi Arabia price war.

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“Being the president of the G20 this year, one would expect that Saudi Arabia will provide a constructive support to the stabilisation of the global oil markets based on their past record,” Birol said.

A fuller picture will be provided in the next two weeks when the IEA publishes its monthly report.

The pandemic has seen global travel demand plummet as border restrictions have been imposed to prevent the virus spreading.

At a meeting earlier this month, OPEC and Russia, known as OPEC +, were unable to agree an oil supply strategy going forward.

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As a result, Saudi Arabia, followed by OPEC allies such as the UAE, decided to dramatically increase oil supply.

This has pushed the oil price to near record lows with warnings it could go below $20 a barrel.

This is compared to prices being around $50 a barrel in February.

The wider picture

There have been additional consequences to this such as countries buying capacity for their strategic reserves.

In turn, this has raised concerns global oil storage capacity could be used up, a fear Birol also voiced.

Read more: Storage space issues could force oil prices down to $10

Several supermarkets have taken advantage of the supply glut to cut their forecourt prices.

However, this has not yet benefited consumers.