What's going on?

After months spent looking high and very, very low for global oil demand, the International Energy Agency (IEA) slashed its forecasts for the slippery elixir on Thursday (tweet this).

What does this mean?

No prizes for guessing what�s to blame for the IEA�s bad mood: the pandemic-driven collapse in demand has ravaged oil prices, and the agency can�t see an easy journey back. Not least because there�s still such low demand for jet fuel: data suggests it�s a long way off what it’d normally be at this time of year in North America and Europe, and even worse in regions like Latin America where the virus is spreading like wildfire. And if globetrotters and holidaymakers keep passing up on those vacations of a lifetime, that low demand won�t be rebounding any time soon�

Why should I care?

For markets: On the OPEC+ side…

The price of oil is still a long way below pre-COVID levels, but the situation has improved since OPEC+ � the group of oil-producing countries and its allies � agreed to temporarily reduce oil production in April. That cut in supply should, at least in theory, help balance out lower demand and spur oil prices higher. But with that languishing demand expected to continue, the group�s ongoing cooperation will be essential if they want to keep prices propped up. And for a group notorious for its infighting, that�s not exactly a given.

The bigger picture: Can�t catch a break.

The IEA�s shift comes hot on the heels of an abysmal quarter for big oil companies, several of which swung to losses from profitability a year ago. Low oil prices, after all, cause havoc for oil companies that earn their livings from extracting the commodity and selling it on. If the agency is right and demand is slow to bounce back, oil investors banking on the industry�s speedy recovery may be forced to think again.