Global crude oil demand growth is expected to plunge by 25%, to 820,000 barrels per day (Bpd), this year due to the coronavirus outbreak, Rystad Energy said Tuesday.
The Norway-based analytical firm said it is “heavily revising down” its 2020 oil demand growth forecast which, before the Chinese epidemic, stood at 1.1 million barrels per day (Mmbpd). In a worst case scenario, growth could be slashed to as low as 650,000 Bpd year-on-year, Kallanish Energy reports.
“Our current assessment implies that the impact of coronavirus will persist throughout all of February and March and will then gradually subside towards June 2020,” said Bjornar Tonhaugen, Rystad Energy’s head of Oil Markets.
“We hence expect travel restrictions and extended holidays in China to significantly impair demand in Q1 20 and partially in Q2 20. Demand is forecast to start recovering in April and May,” he added.
Rystad said global oil demand growth is evaporating as the virus keeps planes grounded. In the first quarter, growth “will be almost entirely wiped out,” the company said. The estimate is now for demand to grow by only 0.1 Mmbpd, down from the 1.2 Mmbpd projected for Q1.
Chinese oil demand accounted for 13% of global oil consumption last year, at 13.9 Mmbpd. Prior to the epidemic, Rystad had estimated Chinese demand would grow by 400,000 Bpd this year – including 100,000 Bpd of growth in jet fuel demand.
“We have now reduced our forecast for Chinese demand growth to 230,000 Bpd this year, and we expect the largest negative impact to be seen in demand for jet fuel,” the company said. Its data show jet fuel demand in the Asian giant dropped by 30% in January, and could potentially decline by 60% in February and March.
China accounts for 14% of global air passengers carried and roughly 13% of global trade in goods. During February and March, both Chinese and international air restrictions could reduce global jet fuel demand by 900,000 Bpd in relation to pre-coronavirus foreseen growth levels, Rystad said.
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