The OPEC oil cartel on Wednesday lowered its forecast for growth in global oil demand this year by nearly a fifth due to the impact of the coronavirus outbreak in China.
In its monthly report on the world’s oil market, OPEC said it now expects growth in global oil demand of 0.99 million barrels per day (mbd) this year, down from the 1.22 mbd forecast last month.
“The outbreak of the coronavirus in China during the first half of 2020 is the major factor behind this downward revision,” OPEC said.
China remains in crisis mode weeks after the epidemic exploded, with much of the country shut down.
Entire cities have been quarantined and the Lunar New Year holidays were extended in a bid to contain the outbreak of what is now known as the COVID-19 virus. International airlines have also halted flights to China.
Those disruptions are expected to hit economic output and China has been a major source of growth in demand for oil in recent years.
“The recent outbreak of the coronavirus in China necessitated a further downward revision to the country’s oil demand growth forecast compared to last month, as transportation fuels, notably aviation fuels, are expected to be impacted” in the first half of this year.
The impact on demand for transportation fuels was exacerbated by the outbreak coinciding with the Lunar New Year holidays, when many Chinese return home to celebrate with family.
OPEC said it had also revised lower its forecast for China’s economic growth this year by 0.5% points to 5.4%.
“The impact of the coronavirus outbreak on China’s economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth in 2020,” it said.