In its latest report, which did not take into account an oil price war that has broken out after Saudi Arabia and Russia failed to agree to continue production cuts, the International Energy Agency chopped its forecast for oil demand by 1.1 million barrels per day (mbd) in its base case scenario.
Slowing global demand had already resulted in cuts by OPEC members and cutting production further, without any appreciable increase in prices, will hurt member nations severely
"Global oil demand has been hit hard by the novel coronavirus (COVID-19) and the widespread shutdown of China's economy," the International Energy Agency said in its latest monthly report.
In a report with the World Economic Forum presented in Davos, the IEA said oil and gas companies face a critical challenge as the world increasingly adopts clean energy transitions to curb global warming.
"For now the risk of a major threat to oil supplies appears to have receded," the Paris-based IEA said in a monthly report.
In its first in-depth review of India's energy policies, IEA said for the share of environment-friendly fuel to rise, the government needs to ensure gas is treated on a level playing field with other fuels for taxation and is included under the Goods and Services Tax (GST).
"We are expecting a demand growth of slightly higher than 1 million barrels per day," said the IEA's executive director, Fatih Birol, adding that growth could remain weak, compared with historical levels.
India's oil demand is expected to reach 6 million barrels per day (bpd) by 2024 from 4.4 million bpd in 2017, but its domestic production is expected to rise only marginally, making the country more reliant on crude imports and more vulnerable to supply disruption in the Middle East, the agency said.
Coal remains a major source of power across Southeast Asia, where breakneck economic development has spurred soaring energy demands -- but at a cost to the environment.
"The OPEC+ countries face a major challenge in 2020 as demand for their crude is expected to fall sharply," the Paris-based agency said in a monthly report.
The IEA said this change should be enough to limit the global temperature rise to below 1.8C.
Launched by PM Modi on May 1, 2016, in Ballia, Uttar Pradesh, Pradhan Mantri Ujjwala Yojana (PMUY) aims to safeguard the health of women and children by providing free cooking gas (LPG) connection to poor families.
Electric vehicles are not expected to make a dent on crude demand in India and elsewhere, IEA's Fatih Birol also said, adding that he expects India's oil demand to continue rising.
The OPEC cartel and its oil-producer nation allies opted in December to trim daily crude output by 1.2 million barrels.
Domestic demand in the United States, the Middle East and North Africa, would contribute to the growth in demand, the IEA said in its annual gas market report.
The report -- The Future of Rail Opportunities for energy -- released on Wednesday by the International Energy Agency said the annual investment in rail infrastructure will increase to USD 330 billion in 2050 globally, on the basis of projects currently in various stages of construction and planning.
World oil markets have been on a rollercoaster ride in recent months, with OPEC and its partners including Russia, often called OPEC+, agreeing to cut back production again from January in order to reverse a slump in oil prices on abundant production and worries about slower global growth.
The Paris-based IEA said in its World Energy Outlook 2018 that energy demand would grow by more than a quarter between 2017 and 2040 assuming more efficient use of energy - but would rise by twice that much without such improvements.
The estimated growth in global demand has been reduced by 110,000 barrels per day for each of the two years.
The International Energy Agency said in its monthly report that the world's spare oil production capacity was already down to only 2 percent of global demand, with further reductions likely to come.
"Definitely there are some worries that oil markets can tighten towards the end of this year and as major oil importing countries India and other countries need to be ready," IEA's Fatih Birol said on Wednesday after a meeting with India's Oil Minister Dharmendra Pradhan.
Supply side troubles and demand side pull along with geopolitical equations makes for a bull case in oil market
The IEA, which coordinates the energy policies of industrialised nations, said global stocks in developed countries could fall to their five-year average - a metric used by OPEC to measure the success of output cuts - as early as May.
"The United States is set to put its stamp on global oil markets for the next five years," said IEA chief Fatih Birol in a statement as the agency released an annual review of the oil market.
IEA Executive Director Fatih Birol said in Tokyo the United States would overtake Russia as the biggest crude oil producer "definitely next year", if not this year.