Paris: Oil consumption will this year fall at the sharpest pace since 1981 due to the crisis afflicting world economies, the International Energy Agency (IEA) said on Thursday as it made new cuts to its forecast for crude demand.
In its closely watched monthly survey, the Paris-based agency said it now expects global oil demand to fall 3% to 83.2 million barrels a day this year, or 2.6 million barrels a day less than in 2008.
That is the ninth consecutive monthly cut the IEA has made to its oil demand forecast since last August, when the IEA had forecast oil demand would reach 87.8 million barrels a day in 2009.
Since then, the IEA has steadily lowered its forecasts as the financial crisis plunged the world into the deepest global recession since the Great Depression.
The last time oil demand fell this much was in the early 1980s, when skyrocketing US inflation spurred the Federal Reserve to hike interest rates, choking off economic growth.
The IEA’s latest estimate represents a slight cut to its last forecast of a 2.8% drop in demand this year, and comes on top of a 0.3% fall in crude consumption last year. It will be the first time oil demand has fallen for two consecutive years since 1982-1983.
Oil prices have enjoyed a rally in recent weeks, rising from near $50 a barrel earlier this month—and edged above $60 (Rs2,988) earlier this week—on hopes that the worst of the recession is over in the US, the world’s biggest oil consumer.
But US economic figures released Wednesday dampened those hopes.
Retail sales unexpectedly fell in April, suggesting consumers are not yet ready to spend again.
“New bullish macroeconomic sentiment has not yet produced signs of oil demand recovery and oil market fundamentals remain weak,” the IEA said. The agency said its forecast is premised on economic recovery “remaining elusive” this year.