The International Energy Agency (IEA) has lowered its global oil demand forecast amid surging coronavirus cases in China and weaker than expected demand in the U.S. and other developed countries.
According to the Financial Times report, The agency now expects demand to average 99.4 million barrels a day this year, down from its previous estimate of 99.7 million b/d in March.
“The stringent lockdowns in China have led us to further revise down our estimate for oil demand in the second quarter and the year as a whole,” the Paris-based group said in its monthly oil market report on Wednesday.
“In addition, more complete demand data for the first quarter of 2022, especially in the U.S., was sharply lower than preliminary estimates.”
The oil market has been highly volatile since Russia invaded Ukraine on February 24. Brent crude last month hit almost $140 a barrel as the market tried to assess the impact of the war on Russia’s vast oil industry.
Later the prices cooled down to some extent as the U.S. and other IEA member countries announced plans to release 240 million barrels from their strategic reserves over the next six months.
Related: Biden Administration Mulls Releasing 180M Barrels Of Oil From Strategic Petroleum Reserve.
Brent fell below $100 a barrel on Monday but then rebounded and was trading at $105 on Wednesday.
The IEA expects the Russian oil supply to fall by 1.5 million b/d in April and forecasts that up to 3mn b/d could be offline from May due to “international sanctions and the impact of a widening customer-driven embargo comes into full force.”
