The global pandemic, coronavirus (Covid-19), will lead to an 11% decline in jet fuel demand in 2020 hitting this sector the hardest with the real possibility of suspended flights in the second quarter of the year, Norway-based energy research center Rystad Energy’s report forecasted late Thursday.
Global oil demand is projected to decrease 0.6% or by 600,000 barrels of oil per day (bpd) year-on-year due to the virus, which has started to lower global economic activity starting in China, according to the Covid-19 report of Rystad Energy.
Total oil demand in 2019 was approximately 99.8 million bpd, and now this is projected to decline to 99.2 million bpd in 2020.
“This is a severe downgrade compared to previous estimates and takes into account the quarantine lockdown in Italy, massive cancellations of flights by airlines, the travel ban between Europe and the U.S. and our simulations of the virus’ growth patterns this year,” the report said.
The report forecasted that global demand for road fuels would stay largely flat in contrast to previous growth projections. Road fuel demand in 2019 is estimated at 49.7 million bpd while before the pandemic, Rystad Energy expected this demand to grow to 50.3 million bpd in 2020.
Now, the global demand for road fuels is expected to reach only about 49.8 million bpd, the report showed.
“Almost all of this reduction will occur due to reduced road traffic in the first half of 2020. In China alone, demand for gasoline and diesel road fuel was down by about 1.5 million bpd in February. Traffic in the country is now gradually returning to more normal levels,” it said in the report.
In Europe, a rising number of cities are implementing quarantines while further travel restrictions are expected in addition to those already in place in Italy.
“From this, we assume peak impact will be half of what was seen in China in terms of volume of reduced demand. However, it remains to be seen whether quarantines in Europe will last longer than those implemented in China,” Rystad Energy said in the report.
Dramatic fall in flights
According to the forecast, the jet fuel sector is to be hit the hardest because of the spread of Covid-19.
Global air traffic will fall by approximately 16% in 2020 compared to the levels seen in 2019 when 190,000 flights were held per day.
U.S. President Donald Trump announced a ban on air travel between Europe and the U.S., which will further impact the aviation industry that has already been suffering as the virus spreads.
“Many distressed airlines will now face heavy cost cuts, and many non-profitable routes are likely to be closed,” the report noted.
Common summer air travel will occur later in the season, according to the report.
“The global daily flight count in the first quarter of 2020 will be 8,000 flights lower than pre-coronavirus forecasts. For the second quarter, the reduction is projected to be 50,000 daily flights, dropping to 31,000 in the third quarter and 13,000 in the fourth quarter,” the report estimated.
The forecasts are open for updates as the situation develops because of the spread of Covid-19.