IEA head sees oil use below pre-virus levels for at least a year

It will take more than a year, and perhaps several, for oil demand to recover to what it was before the coronavirus shuttered economies and caused energy markets to collapse, according to the head of the International Energy Agency.

Crude demand of about 100 million barrels a day prior to the pandemic plummeted by about 30 per cent last month, according to the Paris-based adviser to industrialised countries.

The IEA, which forecast that demand will decline by about 9 million barrels a day on average this year, is set to update its outlook for markets on Thursday.

“When I look at the numbers, they are still very worrying,” the agency’s executive director Fatih Birol said in an interview with Dubai consulting firm Gulf Intelligence. Any gains in demand will come in the second half as some countries start to lift lockdowns and resume economic activity, Birol said.

Oil prices, which have plunged by more than half this year to around $30 a barrel, have recovered somewhat over the past two weeks as OPEC+ countries began cutting output to drain a supply glut.

If prices recover to more than $40 a barrel, production from shale oil fields may increase, Birol said. That would show “that it was too early to write the obituary of shale oil,” he said.