According to the latest report from the International Energy Agency (IEA), the gradual lifting of the lockdowns and the reopening of major economies across the globe is “beginning-a-gradual-but-fragile recover” in the oil sector.

Oil prices have reportedly stabilized due to a slight increase in demand and a huge drop in supply. The agency had earlier tagged the month of April as “Black April” due to the global oil demand drop, the historic negative oil prices recorded as a result of the COVID-19 pandemic, and the total lockdown of major economies.

The agency said non-OPEC countries could lose up to 4 million barrels per day in June, with the OPEC+ agreement coming into effect on May 1^st. Total global supply could decline by 12 mbp/d in May and even more in June because of a further cut in production announced by Saudi Arabia, with the country calling on other OPEC members and allies to do the same.

As a result of the largest demand decline and oil price drop in the history of the oil market, the agency further revised its global oil demand figures for 2020 from its 9.3mbp/d projection last month to 8.6mbp/d for the year. “If crude supply adjusts more quickly to the oversupply than forecast, this will support crude prices and depress refinery margins, resulting in lower refining throughput than anticipated,” the report stated. “We are seeing massive cuts in output from countries outside the OPEC+ agreement and faster than expected.” It added.

The agency projects a jump in global demand in June and July. The cut in supply has been instrumental in the stabilization of the market. “It is on the supply side where the market forces have demonstrated their power and shown that the pain of lower prices affects all producers.”

One major point that the report explains is the prediction in the rise of demand in June and July, but it still highlights the fact that the sharp drop in supply, which is a disadvantage to oil-producers, is the cause for the rebound.

This report is still a projection as the pandemic’s duration is not yet known. A vaccine has not yet been found and the World Health Organization raised concerns earlier this week that COVID-19 might become an endemic virus in communities, and may never go away. There are also fears of a second or third wave of COVID-19 infections.

The report also stated, “Our global 2H20 forecast assumes the virus is largely under control at the global level and that containment measures do not return on a significant scale.” However, the numbers say otherwise, concerning the virus being largely under control. The projections may not come to pass if another wave of the infection hits as countries ease their lockdown restrictions, even as cases are still on the rise.