New Delhi: The International Energy Agency cut outlook for oil demand growth in 2019 primarily on the basis of worsening prospects for world trade. It, however, added that stimulus packages and developing countries should boost growth going into 2020.
The Paris-based agency, which coordinates the energy policies industrial nations, cut its 2019 demand growth estimate by 100,000 barrels to 1.
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2 million barrels per day on Friday. It added that the figure is expected to go up to 1.4 million bpd for 2020.
"The main focus is on oil demand as economic sentiment weakens … The consequences for oil demand are becoming apparent… The worsening trade outlook (is) a common theme across all regions," the IEA said in its monthly oil report.
The IEA noted that the lacklustre demand growth in the first half of the year can be primarily attributed to a slowdown in the petrochemicals industry in Europe, warmer than average weather in the northern hemisphere and stalled US gasoline and diesel demand.
"Stimulus packages are likely to support growth in the short term. In addition, the major central banks have stopped or slowed interest rate increases, which should support growth in 2H19 and 2020," the IEA said.
The IEA also said that government measures to mitigate the economic slowdown and a robust consumption in the non-developed world will push demand growth to around 1.6 million bpd in the second half of the year.
"US sanctions on Iran and Venezuela, an output cut pact by the Organisation of the Petroleum Exporting Countries (OPEC) plus its allies, fighting in Libya and attacks on tankers in the Gulf of Oman added only limited uncertainty to supply," the IEA said.