European COVID-19 lockdowns denting demand for oil: IEA

According to an official from the International Energy Agency (IEA), if Europe sees renewed lockdown measures to contain rising cases of the coronavirus-induced COVID-19 pandemic it could push back the outlook for the global demand for oil towards a downward slope.

In a statement, Keisuke Sadamori, IEA’s director for energy markets and security, stated the impact would, however, likely be less severe than under lockdowns earlier in the year.

“Major parts of the European continent are in lockdown. This would surely work toward the negative side,” said Sadamori in an interview, while stopping short of saying that the group would formally lower its forecast. “We certainly expect this time for there to be a lower impact than the last lockdown … This time schools are kept open and some of the stores are still open.”

While oil prices have recovered from their earlier sharp falls earlier this year and are hovering around $40 a barrel, fears that demand for oil will be low continue to persist; further with the results of the U.S. elections headed for legal hurdles, the markets continue to remain on a knife-edge.

“The oil and gas industry, in the U.S. in particular, is looking at the outcome of this election with a huge amount of interest,” said Sadamori. “If the Democrats plan for radical energy low-carbon transformation — if the Senate remains in the hands of Republicans, there will be obstacles to that legislation. Overall, we need to see the entire outcome.”

Incidentally, in its monthly report on October 14, the IEA had kept its 2020 and 2021 oil demand outlook steady; but this was before major European countries including France, Germany, and the United Kingdom imposed strict new curbs on movement to check the spread of the virus.

Paris-based IEA is set to publish its next analysis of the oil market later this week on Thursday.

China, from where the Wuhan coronavirus emerged, is the world’s only major bright spot and is on track to be the only major country to boost its year-on-year demand for crude oil, said Sadamori.

Products demand presents a mixed picture, said Sadamori, while kerosene and jet fuel continuing to slide downwards, demand for oil and gasoline are, in comparison, performing much better.

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