Fatih Birol, head of the IEA, said that even if lockdown measures are eased in the 2nd half of the year, demand will continue to drop in 2020, falling by a record 9.3mb/d year-on-year.
Exploration and production spending will be down to a 13-year low of $335 billion, its lowest in 13 years, although producers still face the challenge of investing to “offset natural production declines and to meet future growth.”
However, the IEA praised a historic agreement by OPEC+ to cut global production by nearly 10 million barrels per day, which will see supply drop by 12 mb/d when coupled with cuts with other areas such as the US and Canada. There will be a “gradual recovery” in the 2nd half of the year, according to the IEA, but demand in December will still be down 2.7 million barrels a day year-on-year.
Meanwhile, an “implied stock build-up” of 12 mb/d “threatens to overwhelm the logistics of the oil industry in the coming weeks”, referring to ships, pipelines and storage tanks. The group said global capacity could be “saturated” in mid-year, however that is a broad-brush view, with the situation varying from location-to-location.
The report added this “undermines the ability of the oil industry to develop some of the technologies needed for clean energy transitions around the world”.
