Oil demand growth grinding to lowest in years as global economy stalls

World oil markets have undergone a U-turn, switching from supply-side risks like OPEC’s production cuts or U.S. sanctions against producers Iran and Venezuela, analysts said, to concerns of slowing consumption amid fears of a global recession.

As a result, crude oil prices have turned a 45% price rally in the first four months of the year into a slump of more than 15% since late April. [O/R]

U.S. investment bank Goldman Sachs said on Wednesday that weakening economic growth and lower oil demand expectations were “the largest driver of the move lower over the past month” in crude oil prices.

And with the outlook dim amid trade disputes - especially the one that has led to an expanding exchange of tariffs between China and the United States - analysts have revised down their oil demand growth forecasts.

Fereidun Fesharaki, chairman of energy consultancy FGE, said the demand slowdown came amid a “general fear of an economic downturn,” and warning that if the U.S.-China trade dispute continues, “real signs of economic recession will be seen.”

Due to the economic jitters, FGE this week revised down its global oil demand growth forecast to 1 million barrels per day (bpd) from 1.3 million bpd, in line with other recent downward corrections.

Barclays bank said this week it had revised down its economic growth outlooks for the United States, China, India and Brazil, countries that account for more than three-quarters of global oil demand growth.

The British bank also cut its oil demand growth forecast by 300,000 bpd to 1 million bpd.