International Energy Agency warns about global oil demand in coming months and its consequences

This week, the first World Economic Forum takes place in Davos, Switzerland, with the presence of the public since 2020. Fatih Birol, executive director of the International Energy Agency, spoke about the major challenges of the oil market worldwide to the second semester. The scenario of decline in the demand of oil in China. 

In an interview given to CNBC, the executive director of the entity said he sees the current price of oil as very high. He said current oil price is a risk to economic recovery worldwide, but especially in emerging countries. This is a big risk, along with high food prices, it could push us into a recession, he concluded.

Because of all the problems involving the invasion Russian, the price of a barrel of oil type Brent it's costing around $113 currently. 

The International Energy Agency still expects that the increase in oil demand in Brazil, the United States and Canada will be accompanied by an increase in production from the main producers in the world, mainly in the Middle East.

“I very much expect that the increase coming from the United States, Brazil, Canada this year will be matched by the increase coming from the main producers in the Middle East and elsewhere. In addition, Chinese demand needs to remain very weak”, highlighted the director of the Agency.

Oil demand in China plummets 

In an attempt to curb the spread of Covid-19, the Chinese government has once again imposed strict social distancing measures. The actions prevented the growth of cases in the country, however, resulted in a sharp drop in oil demand.  

It is believed that the demand for gasoline, diesel e fuel of aviation fell 20% in the month of April. That figure is equivalent to a drop of 1,2 million barrels of oil per day. Fatih Birol, director of the International Energy Agency, also warned that if China recovers usual oil demand in the coming months, we will have a very difficult summer around the world.

International Energy Agency recommends smart investments in the energy sector 

The oil market is one of the most impacted by the tension between Ukraine and Russia. Birol called on countries to make the right investments in response to the shortage of fossil fuels that have been caused by this conflict.