A man drags a handcart across an empty road in Wuhan on February 5. Credit: Getty Images

The amount of oil needed to run the global economy will decline sharply in the first quarter of this year as the coronavirus forces factories to close in China, snarls transportation and hits supply chains.

Global oil demand in the first three months of 2020 is expected to drop by 435,000 barrels per day compared to a year earlier, according to the International Energy Agency, the first quarterly decline in more than a decade.

The agency also marked down its forecast for oil demand growth for the whole of 2020. It is now expected to increase by just 825,000 barrels per day, the weakest annual pace since 2011.

The IEA said in its monthly oil report that the impact from the coronavirus was difficult to measure at this stage.

"The onset of [the coronavirus] will likely have a large impact on both the world's economy and oil demand," said the agency. "Consequences will vary over time, with the initial economic hit on transportation and services, likely followed by Chinese industry, then eventually exports and the broader economy."

However the IEA did say there is "little doubt" that coronavirus will have a bigger impact on oil demand and the global economy than the severe acute respiratory syndrome (SARS) outbreak in 2003.

"While steps taken in China to reduce its spread were adopted earlier than in the SARS crisis and have been far more extensive, the profound transformation of the world economy since 2003 means China's slowdown today is bound to have a stronger global impact," it said.

Read the full report here.