The International Energy Agency has warned that the resurgence of coronavirus cases in parts of the world was “casting a shadow” over the oil market’s nascent recovery.
“In some countries, [the] accelerating number of Covid-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside,” the Paris-based body said in its monthly oil outlook.
Brent crude, the international oil benchmark, dropped below $20 a barrel in April to an 18-year low but has since rebounded to above $41 a barrel as supply curbs by major producer countries coincide with a recovery in demand.
Global oil supply fell by 2.4m barrels a day in June to a nine-year low of 86.9m b/d. Production curbs from Opec and allies including Russia are taking place in conjunction with declines from other countries such as the US and Canada.
Since April, output has fallen by 14m b/d, the IEA said, but supply is expected to recover. Overall it is projected that global supply could fall by 7.1m b/d in 2020 before rising by 1.7m b/d in 2021.
Global oil demand fell by 16.4m b/d in the second quarter as governments imposed lockdowns and travel bans to curtail the spread of coronavirus, from pre-crisis levels of about 100m b/d.
As demand recovers in countries such as China and India, over the course of 2020 these declines are expected to average 7.9m b/d and 5.3m b/d in 2021.
“The recent increase in Covid-19 cases and the introduction of partial lockdowns introduces more uncertainty to the forecast,” the IEA said.