BAKU, Azerbaijan, Dec.16
By Leman Zeynalova – Trend:
Oil demand will recover nearly two-thirds of the amount lost in 2020, rising by 5.7 mb/d year-on-year (y-o-y), Trend reports with reference to the International Energy Agency (IEA).
“Most of these gains are explained by a rebound in economic activity and the expected easing of social distancing measures. Growth in gasoline and diesel should be particularly strong and demand for both fuels is projected to return to 97-99% of their 2019 levels. The shortfall is mostly due to Covid-19 counter-measures in OECD countries in 1Q21 and the tough economic situation,” IEA said in its latest report.
The organization believes that jet fuel/kerosene demand is not expected to recover quickly, as governments intend to keep in place border closures and travel restrictions until a vaccine is widely available.
“In addition, while many consumers will be keen to fly on holiday once restrictions are eased, older citizens are likely to remain cautious, while those affected by the economic crisis will have less to spend on tickets. Business travel may also remain muted in the interests of cost cutting and penalised by the proliferation of online meetings. Jet fuel/kerosene demand will rise by 720 kb/d y-o-y in 2021, but remain 2.5 mb/d below its pre-pandemic level. It will account for around 80% of the overall 3.1 mb/d shortfall in consumption in 2021 versus 2019. This month, we revise down our 2021 jet fuel/kerosene forecast by 300 kb/d due to the slower path of recovery of the industry,” reads the report.
IEA’s central assumption is that vaccines will be introduced in OECD countries in 1Q21 and widely administered in 2Q21 and 3Q21, thus allowing many activities to progressively return to normal.
“However, considerable uncertainty remains about vaccines’ efficacy, availability, and deployment. It is possible that, after the upcoming holiday season, a third wave of the virus will affect Europe and other parts of the world before vaccines have time to take effect. This would bring renewed downward pressure on oil demand.
For 2020, we have revised down our demand estimate by a modest 50 kb/d in this Report. However, within the annual number there are significant downgrades to both 3Q20 (-160 kb/d) and 4Q20 (-180 kb/d). This reflects the resurgence of the pandemic in Europe, Russia and the United States. Demand in 2Q20 has been revised up with new data for Indonesia. We now expect oil demand to fall 8.8 mb/d y-o-y. Our 2021 forecast for growth was revised down by 110 kb/d to 5.7 mb/d, largely because of the lower aviation estimates,” said the organization.
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