Wood Mackenzie: Jet fuel to be most susceptible to Wuhan virus

Wood Mackenzie: Jet fuel to be most susceptible to Wuhan virus

BAKU, Azerbaijan, Feb.21

By Leman Zeynalova – Trend:

The ongoing coronavirus outbreak and subsequent large-scale quarantine measures are posing a major economic risk to China and beyond, Wood Mackenzie consultant Yujiao Lei told Trend, commenting on the impact of the Wuhan coronavirus on oil demand,

"With respect to the impact on oil demand, as preventive measures focus mainly on aviation and public passenger transport, jet fuel will be the most susceptible. The experience during the 2003 SARS outbreak suggests a severe and one-off impact to China’s demand for jet fuel and, to a lesser degree, gasoline and diesel," said the expert.

He pointed out that although the Chinese government has been taking action more swiftly in a more determined manner than in 2003, Chinese domestic and international transport activity is incomparably higher today and thus the impact may be larger.

"For Q1 2020, China’s oil demand could be reduced by over 250,000 b/d. Taking into account adjustments to other regions for separate reasons also, we have adjusted Q1 2020 world oil demand lower by 0.5 million b/d. We expect oil demand to gain strength and start to recover after the first quarter, especially in the second half of 2020," added Lei.

"The nature of currently implemented preventive measures, and China’s oil demand trajectory during the SARS epidemic in 2003, lead us to the following viewpoints to possible impacts of the current outbreak.

• The ongoing coronavirus outbreak will likely be a one-off event, with its effect on oil demand focusing mainly on jet demand principally in China and to a lesser degree in East/Southeast Asia. The impact on the other regions will likely be relatively modest.

• Chinese overseas travel increased from 20 million in 2003 to around 150 million in 2018 in terms of person-times. In 2018, Asia (predominantly East/Southeast Asia) accounted for nearly 90% of Chinese overseas travels. As a survey shows that more than half of Chinese overseas travellers prefer group tours, the ban on tour packages will severely restrain the number of Chinese visitors to popular destinations in East/Southeast Asia, such as Japan and Thailand.

• Gasoline demand will likely be less affected by travel restrictions per ser, except in the areas where the use of cars is newly restricted as a preventive measure against the epidemic. Gasoline demand, though, will likely be more susceptible to precautions taken voluntarily by consumers and businesses to avoid large crowds. People’s reluctance to spend time in crowded areas would restrain retail businesses and social events, further discouraging consumers from making trips. Besides, many companies are encouraging telecommuting to their employees, reducing the need for driving too.

• As the imposed transport restrictions focus principally on public passenger transport, the impact on freight transport will likely depend on overall industrial and economic activity in China. If the severe transport restrictions such as those implemented in Wuhan linger, they would also restrain the affected local economy. Clusters of automotive manufacturing and high-tech industries are located in Wuhan, while Hubei Province accounts for over 4% of China’s GDP. Meanwhile, China’s diesel demand is led principally by road freight, and unlike in 2003 when China was in the middle of resource/materials-intensive industrialization, road diesel demand has been weakening already since 2019. This weakness would be exacerbated by a slowed economy.

• The impact on the use of petrochemical feedstock will likely depend mainly on the overall status of manufacturing as well as private consumption. Since China is a net importer of ethylene/propylene derivatives, if China’s domestic petrochemical demand slows, it will likely first lead to a reduction in imports of petrochemical goods, affecting global operation of derivative exporters to China. Based on the viewpoints above, we currently expect China’s total in-land oil demand (excluding the marine sector) to grow by 150,000 b/d year on year in Q1 2020, a downward revision by over 250,000 b/d from our previous outlook in the early January 2020. For jet, gasoline and diesel/gasoil combined, in particular, demand is expected to fall by 100,000 b/d in Q1 2020. The low growth in total demand compares with annual average growth for China of over 300,000 b/d in 2019. Based on the assumption that the current outbreak will be largely contained within the coming few months, China’s total demand is expected to gain strength especially in the second half of the year, led mainly by petrochemical feedstock. For 2020 in total, our current forecast is for the coronavirus to lower our forecast for global oil demand by more than 100,000 b/d on an annual average basis to a projected gain of 1.2 million b/d for the year, but the risks are clearly on the downside," said the expert.

---

Follow the author on Twitter:@Lyaman_Zeyn

Uzbek TPP to use German equipment for energy production
Uzbek TPP to use German equipment for energy production
Greece decreases petroleum oil exports from Kazakhstan
Greece decreases petroleum oil exports from Kazakhstan
Japanese TEPSCO to join creating green energy zone in Azerbaijan's liberated territories
Japanese TEPSCO to join creating green energy zone in Azerbaijan's liberated territories
Loading Bars
Latest
Turkey's 1Q2021 revenues from car export to int'l market grow
We reject, don't recognize decision of Latvian gov't on so-called "Armenian genocide" - Turkish Defense Ministry
Georgia launches campaign to popularize state agricultural insurance program
New “Azerbaijan” Ro-Pax ship built in country’s shipyard to make its first voyage from Port of Baku (PHOTO/VİDEO)
Former Maldives president hurt in blast outside home
Turkey’s inactive COVID-19 vaccine makes it to WHO list
Saudi Arabia showing interest in importing Azerbaijan's AzGranata products
Araghchi arrives in Vienna to attend 4th round of JCPOA talks
Kazakhstan - Greece trade down y-o-y
Georgian banks see profit in 1Q2021
Azerbaijan’s Azerishig company opens tender to buy various combined, storage accessories
Uzbek TPP to use German equipment for energy production
Azerbaijani national team holds podium training for upcoming Rhythmic Gymnastics World Cup in Baku (VIDEO)
International Bank of Azerbaijan opens tender to buy Cisco network switches
Kazakhstan, Russia lift mutual restrictions on import, transit of livestock products
World auto concerns’ production volume to decrease during 6M2021
OSCE Chairperson-in-Office welcomes release of Armenian detainees by Azerbaijan
Greece decreases petroleum oil exports from Kazakhstan
Sputnik Light vaccine can be used for people aged 18-60
Moderna booster increases antibodies against COVID-19 variants, early data shows
Azerbaijan names amount of subsidies paid out for cropping
Yerevan ready to exert all efforts to fulfill trilateral agreements on Karabakh - acting PM of Armenia
Lebanon could gradually go dark as cash for electricity runs out
New greenhouse to be built in Turkmenistan’s Mary region
Several digitalization projects implemented in Kazakh oil & gas sector
Kazakhstan's president decides to provide humanitarian aid to Kyrgyzstan
Real estate purchases soar in Kazakhstan
Saudi Arabia eyes importing finished meat products from Uzbekistan
Azerbaijan's non-oil exports show positive trend despite impact of COVID-19 - minister
Kazakh Kazgeology eyes working on promising areas of natural resources
Main part of Iran's trade carried out by sea - analyst
Israel and Korea to sign free trade agreement next week
EU continues to support Georgia SMEs
Azerbaijan launches system for predicting impact of tax benefits on state revenues
Azerbaijan's AzFina, CBA developing bill on regulation of payment systems
Georgia's minister claims inflation in country to decrease in coming months
Kazakhstan reports increase in oil, natural gas prices
Azerbaijan may change procedure for navigation on inland waters for fishing vessels
Azerbaijan shares data on number of vaccinated citizens for May 6
Construction of Ahmadbayli-Fuzuli-Shusha highway in Azerbaijan continues (VIDEO)
Azerbaijan confirms 844 more COVID-19 cases, 2,057 recoveries
Uzbek-Korean JV to buy power cables via tender
Kazakh-Georgian Economic Union to focus on int'l trade and dev't of transport services - Honorary Consul
First section of Georgian Rikoti Highway to open soon
Kazakh IT company involved in creation of "smart" settlements in Azerbaijan
Japanese TEPSCO to join creating green energy zone in Azerbaijan's liberated territories
Azerbaijan's Mine Action Agency eyes to purchase new mine clearance equipment
Uzbek-Korean JV opens tender for construction of security facility for gas treatment
Turkmen Ministry of Construction extends tender for design of buildings
Georgia to host annual meeting of ADB board of governors
Spain tourist arrivals slump 76% in March, recovery still far off
Azerbaijan's construction sector output to grow till 2026 - expert
Trade ministry discloses volume of cereals imported by Austria from Turkey
Share of mining sector in Baku's industrial production disclosed
Amazing opportunities created for athletes in Baku’s National Gymnastics Arena - Ukrainian Gymnastics Federation
Turkmengas opens tender for purchase of chemicals
Kazakhstan's National Bank unveils preliminary balance of payments data
Statistics on trade turnover between Spain, Turkmenistan revealed
Uzbekistan receives permission to export pomegranates to China
Moderna raises 2021 sales forecast for COVID-19 vaccine to $19.2 billion
Not calling released soldiers as "POWs" by OSCE Minsk Group - outrageous - Armenian media
Tesla developing platform to allow car owners in China data access
Bahar Azadi gold coin price rebounds in Iran
Over 10 mln COVID-19 vaccine doses administered in Saudi Arabia
Russia reports over 7,600 COVID-19 cases in the past day
Revanchist statements in Armenia mustn't be taken seriously - Azerbaijani Security Council
Precious metal prices in Azerbaijan fluctuate
No reason to worry about fulfillment of trilateral statement - Azerbaijan's Security Council
Nominations for gas flows at TAP’s interconnections
Azerbaijan to build road to legendary "Isa Spring" in Shusha city
EU countries agree to open up to Israeli tourists
Turkmenistan names data on deposits in credit institutions
Iran unveils volume of transit through Gilan Province
Largest share of Uzbek textile production falls on Fergana region
Turkey boosts export of cars to Kazakhstan
Turkey publishes data on 4M2021 steel exports
Iran's Amir-Kabir Petrochemical Company beats sets new production record
Turkey's 4M2021 exports of locally-made furniture up in value
Turkey reveals 4M2021 data on export of grains, legumes to Azerbaijan
Exports through Iran's Astara border checkpoint increase
Uzbekistan to launch several TPPs in 2021
Uzbek agency reveals data on most profitable companies
ADB approves loan for construction of Georgia’s Olympic swimming pool
Georgia in talks with Johnson & Johnson and Novavax to receive vaccines
Georgian ISET-PI shares pricing on residential real estate in Tbilisi
Georgian Pension Agency shares data on pension fund's assets
Uzbekistan reveals number of vaccinated people
Kazakh uranium extracting company opens tender to buy spares
Kazakhstan decreases trade with Canada amid COVID-19
China increases import of Turkish-made cars
Turkey reveals 1Q2021 data on cargo movement via local ports from Belgium
Kaspersky Lab shares data on Azerbaijani users facing cyber attacks in 2020
Several facilities in education sector put into operation in Iran
Gold production at Iran's Zarshouran mine increases
Azerbaijan to completely clear "Victory Road" to Shusha city of mines soon
Azerbaijan shares details on mine clearance in liberated territories
South Korea to contribute to developing Azerbaijan's innovation ecosystem
Iran reveals COVID-19 data for May 6
Turkey sees increase in 4M2021 cement exports
Iran releases data of exports from Arvand Free Trade Zone
All news