How the Covid-19 pandemic wiped out oil demand around the world

  • Currently, between a third and a half of the world’s population is in lockdown, meaning few people are driving, flying or doing much that would require the use of crude or its derivatives.

File photo used for representational purpose only. (REUTERS)
File photo used for representational purpose only.
Get Launch Updates on
Notify me

Global oil demand is being destroyed as the coronavirus forces people around the world to remain indoors and avoid all unnecessary travel.

Currently, between a third and a half of the world’s population is in lockdown, meaning few people are driving, flying or doing much that would require the use of crude or its derivatives.

Also check these Vehicles

Find more Cars
Mahindra Ekuv100 (HT Auto photo)
UPCOMING
BatteryCapacity Icon40 kWh Range Icon150 Km
₹ 8.25 - 10 Lakhs
Alert Me When Launched
Porsche 911 Gt3 (HT Auto photo)
Engine Icon3996.0 cc FuelType IconPetrol
₹ 2.50 Cr
Compare
View Offers
Mahindra S204 (HT Auto photo)
UPCOMING
₹ 12 Lakhs
Alert Me When Launched
Lexus Nx (HT Auto photo)
Engine Icon2494.0 cc FuelType IconMultiple
₹ 64.90 - 71.60 Lakhs
Compare
View Offers
Rolls-royce New Ghost (HT Auto photo)
UPCOMING
Engine Icon6750 cc FuelType IconPetrol
₹ 6.95 - 7.95 Cr
Alert Me When Launched
Mercedes-benz Amg E53 Cabriolet (HT Auto photo)
Engine Icon2999.0 cc FuelType IconPetrol
₹ 1.30 Cr
Compare
View Offers

The ramifications for the oil market are huge, with refiners, producers and even petrostates all facing uncertain futures. The most immediate set of data from America starkly illustrated the impact. On Wednesday, the U.S. Energy Information Administration reported U.S. drivers consumed the least gasoline for at least 30 years, as normal life ground to a halt.

Also Read : Petrol pump operators face mounting loss over drop in sales, seek financial help

Demand for crude could fall by 27 million barrels a day this month, according to Rystad Energy AS, while Trafigura Group estimates the current hit to consumption is around 35 million barrels a day.

Against this backdrop, the Organization of Petroleum Exporting Countries and its allies held a virtual meeting to try and hammer out an agreement to curb supply and prevent the world drowning in unwanted crude.

Below is a reminder of how consumption has been affected in various countries.

U.S.

U.S. oil demand has now fallen to 14.4 million barrels a day, the lowest in data going back to 1990 and a drop of more than 30% from pre-crisis levels, government figures showed Wednesday. In its short-term outlook, the EIA forecast the hit to oil demand will be 16.7 million barrels a day in April. A number of U.S. refiners, including HollyFrontier Corp. and Marathon Petroleum Corp., cut run rates by 30%.

India

Crude demand in the world’s third-biggest consumer has collapsed by as much as 70% as India endures the planet’s largest national lockdown, according to officials at the country’s refiners. Consumption for the entire month could average about 50% below last year’s levels but that’s based on India’s three-week lockdown ending on April 15 as planned, according to the officials. That’s 3.1 million barrels a day of lost oil demand, according to data compiled by Bloomberg.

China

Oil refineries in China, the world’s biggest crude importer, may increase processing rates to near last year’s average levels this month, providing a glimmer of hope to a global market reeling from the virus. Meanwhile, processing at private refiners, known as teapots, will continue to ramp up with some idled plants set to resume in April, Chinese industry researcher SCI99 said. Wuhan, the epicenter of the coronavirus pandemic, officially re-opened on Wednesday after being locked down for almost four months.

Spain

In Spain, one of the countries hit worst by the disease, oil product demand fell by 23% in March, according to BloombergNEF. Air and road fuel consumption were the most affected, with gasoline and road diesel falling by 35.5% and 26.5% respectively. Demand for kerosene, predominantly consumed in the aviation sector, fell 42.5% as aircraft remained grounded across much of the country. Spain has extended its lockdown until April 25.

Italy

Italy, which together with Spain imposed some of Europe’s harshest restrictions on movement, is also expected to extend its lockdown from April 13. With the nation under strict restrictions of movement, retail fuel sales have plunged 85%, according to service station union estimates. The country’s refiners risk permanent supply-chain disruption if the country’s lockdown runs into June and companies stockpile crude and reduce production, industry lobby FederPetroli Italia said.

U.K.

Sales of gasoline and diesel in the U.K. were down by 66% and 57%, respectively, as of March 31, according to the U.K. Petrol Retailers Association. Britain’s top supermarket, Tesco Plc, said gasoline sales were down 70% over the “last weeks" following the U.K. lockdown.

Netherlands

A survey of Dutch car dealers, driving schools and transport companies revealed that respondents had lost almost half of their revenue due to the coronavirus and about 80% may need to seek additional credit within three months. “The Netherlands really has come to a standstill," said Bovag spokesman Tom Huyskens. “Only those that really need it are driving, filling up their tank, but otherwise traffic has pretty much stopped."


Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape.

First Published Date: 10 Apr 2020, 20:27 PM IST
NEXT ARTICLE BEGINS

Check Latest Offers

Please provide your details to get Personalized Offers

Choose city
+91 | Choose city
Choose city
Select a dealer

Want to get the best price for your existing car?

Powered by: Spinny Logo
By clicking "View Offers" you Agree to our Terms and Privacy Policy
Dear Name

Please verify your mobile number.

+91 | Choose city
Couldn't verify the OTP.
It's either expired or it's incorrect.