China’s lockdowns will help cut global oil demand, predicts IEA
Draconian lockdown measures introduced in China to combat outbreaks of Covid-19 mean global oil demand will not be as high as expected, the International Energy Agency has said, helping cushion the impact of the dwindling supply from Russia.
In its monthly report on world oil markets, the IEA said it expected Russia’s output to fall by 1.5m barrels per day (bpd) in April, with the decline accelerating to 3m bpd from May, as buyers either voluntarily boycott Kremlin-controlled supplies or hold back because of uncertainty over sanctions.
The projection indicates that as much as 3% of global supply could be lost by the middle of spring as a result, given Russia’s position as the world’s second-largest oil producer. But there was unlikely to be a “sharp deficit” in global oil markets, the IEA said, thanks to multiple factors mitigating the impact of lost Russian flows.
The most recent is the imposition of what it called “stringent” anti-Covid restrictions in China, where the one-party state has put all 26 million people in Shanghai into lockdown. Weaker-than-expected demand in countries of the OECD – a group of mostly developed nations – added to the decline, the Paris-based agency said.
As a result, the organisation lowered its global oil demand forecast by 260,000 bpd compared with last month’s prediction and now expects the world to need an average of 99.4m bpd in 2022.
The figure is still an increase of 1.9m bpd on 2021 because of the global economic rebound from that year, which was more heavily affected by Covid restrictions around the world.
That recovery, coupled with market turmoil caused by Russia’s invasion of Ukraine, had sent oil prices soaring to near record highs.
The resulting surge in fuel prices has been felt by
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