IEA: Q2 Crude Oil Demand May See Largest Drop Since Pandemic

PARIS (CNA) – The International Energy Agency (IEA) stated today that crude oil demand in the second quarter could see its largest drop since the COVID-19 pandemic severely impacted the global economy in 2020. The agency also noted that Russia's oil and related product export revenues doubled to $19 billion last month. According to Agence France-Presse, the IEA's monthly report indicated that the Middle East conflict, leading to soaring oil prices, will force many countries and industries to reduce oil consumption, with demand reductions expected to further expand as supply shortages and high oil prices persist. The IEA's forecast is based on a "baseline scenario" where crude oil transportation through the Strait of Hormuz is expected to resume in May. Iran has effectively blockaded the strait since the US and Israel began bombing Iran on February 28. In this scenario, second-quarter demand is projected to decrease by 1.5 million barrels per day, marking the largest decline since COVID-19 devastated fuel consumption. The IEA estimates that overall demand decreased by 800,000 barrels per day in March and is projected to decrease by 2.3 million barrels per day in April. However, the IEA also warned that if the Strait of Hormuz remains blocked, under a "long-term scenario," crude oil demand could plummet further. In such a situation, the global energy market and economy must prepare for significant disruption in the coming months. A major beneficiary of the Middle East turmoil is Russia, as the United States eased sanctions on Russian crude oil to stabilize rising energy prices. According to Reuters, the IEA reported that Russia's oil and petroleum product export revenues in March doubled from $9.75 billion in February to $19 billion. (Compiler: Yang Zhaoyan) 1150414