OPEC slashes oil forecast as coronavirus hits demand

OPEC has slashed its forecast for annual global oil consumption on the expectation that there will be almost no growth in demand as the coronavirus hits the world economy.

A month after forecasting that consumption of oil would rise by almost 1m barrels a day, or 1%, OPEC said it now expects growth of 60,000 barrels a day.

OPEC's monthly report said: "World oil demand growth in 2020 is … adjusted lower … reflecting slower global economic growth associated with a wider spread of COVID-19 beyond China. The impact of the COVID-19 outbreak in China and its adverse impacts on transportation and industrial fuels were the main causes of this downward revision. In addition, the outbreak is also assumed to severely affect oil demand growth in various other countries and regions outside China."

The group of leading oil producers said other markets affected would include Japan, South Korea, OECD Europe and the Middle East. It said recent developments suggested further reductions in the forecast would be required if current conditions persist.

The potential effects on the world economy of the coronavirus outbreak have disrupted OPEC and its relationships with other producers such as Russia. After failing to agree a unified response Saudi Arabia cut prices and announced large production increases that have sent crude oil prices plunging.