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On Thursday, the International Energy Agency lowered its forecast for international oil demand for the years 2020 and 2021 due to the continuous decline of the transport sector, especially aviation, in addition to the health crisis.
It is expected that demand for oil will decline this year to 91.9 million barrels per day, or 140 thousand barrels per day, less than expected, before returning to rise to 97.1 million barrels per day next year, which is 240 thousand barrels less.
The agency said in its monthly report on oil that “air and land transport, which are the two most important components of oil consumption, are still facing difficulties.”
The Paris-based agency, which advises developed countries on its oil policy, said it had lowered its forecast for the next year “because it seems that the air sector will need a longer time to recover.”
And the outbreak of the new Corona virus contributed to a complete halt of commercial flights, which are currently slowly resuming.
According to the figures published by the agency, global air navigation declined by two-thirds in July compared to normal conditions, after a decline of 75% in June and 79% in May.
The agency added that “business trips will remain very limited internationally as long as a vaccine for Covid-19 is not developed, while leisure trips will be local or to nearby countries.”
These difficulties were in the field of transportation, as well as the decline in activity in general, which led the agency to anticipate a historic collapse of oil demand this year. It is expected to rise next year, but below 2019 levels.
In light of this situation, the producing countries decided to control the oil supply to support its prices, which fell due to the crisis and became stable.
But the level of production rose in July, the agency said. On Wednesday, the oil-exporting countries announced that they pumped more oil last month, especially Saudi Arabia.
The Energy Agency warned that “the current uncertainty related to demand due to Covid-19, with the possibility of increasing production, means that rebalancing the market remains a sensitive task.”