NEW DELHI: The order of Union Ministry of Home Affairs relaxing lockdown restrictions on select industries from April 20 is likely to prop up the plunging domestic fuel demand. But the impact of the pandemic is set to see global oil consumption record its largest ever fall this year.
According to the International Energy Agency (IEA), global oil demand is expected to decline by a record 9.3 million barrels per day (mbpd) year-on-year in 2020.“The impact of containment measures in 187 countries and territories has been to bring mobility almost to a halt,” the agency said.
In April alone, broad restrictions on movement and industries across the globe are expected to result in an unprecedented 29 mbpd decline, compared to the previous year. For the April-June quarter, this figure is expected to fall 23 mbpd. While the rest of the year is expected to see consumption rising steadily, the “recovery in the second half of 2020 will be gradual; in December, demand will still be down 2.7 mbpd YoY,” IEA said.The agency’s forecast sent jittery crude oil prices diving again, Brent crude falling by 4 per cent to trade at $28.4 per barrel at 6.30 pm IST.
Relaxations to prop up demand in India
With one of the most stringent lockdowns among its global peers, India’s fuel consumption had dived by over 60 per cent since March 25, according to sources. The IEA’s report places the fall in Indian fuel consumption at 18.7 per cent in the second quarter and 2.7 per cent in the third, before rising by about 1.4 per cent in the fourth quarter of 2020.
However, Wednesday’s directive from the MHA allowing a wide range of industries to function, mostly away from urban centres, is likely to lessen the impact of the pandemic.“There are a substantial number of industries that are to be allowed to function from April 20 and this will see at least some of the diesel and petrol demand restored,” said a senior executive working with one of India’s three state-owned oil marketing firms.
Magnitude of the fall
According to the International Energy Agency (IEA), global oil demand is expected to decline by a record 9.3 million barrels per day YoY in 2020, as a result of the containment measures.