World trade growth has fallen back to its slowest pace since the financial crisis ten years ago and the consequences for oil demand are becoming apparent, according to the International Energy Agency (IEA).
In its outlook for 2020 the IEA explained that volatility has once again returned to oil markets, with Brent prices falling to USD60 per barrel in late May. While concerns over supply have shaped the market for most of 2019 so far, the focus is shifting as economic sentiment weakens.
The IEA said that a number of factors are contributing to sliding demand in Organisation for Economic Co-operation and Development (OECD) countries, including a slowdown in the petrochemicals industry in Europe and tepid demand for gasoline and diesel in the USA. The worsening trade outlook, however, was a common theme across all regions.
On the other hand, non-OECD countries saw demand rise and, at least for now, there is optimism that the latter part of this year will see an improved economic picture. This will be welcome news for the pipeline of projects that depend on stability in the oil market.