OPEC revises global jet fuel demand down due to coronavirus
OPEC yesterday negatively revised its forecast for global jet fuel demand, with the new coronavirus outbreak in mainland China accounting for most of the projected slump.
Globally, OPEC estimates 100.73 million barrels of oil will be consumed per day in 2020, with the second half of the year recording higher consumption than the first, according to OPEC’s monthly report. This is a downward revision of 200,000 barrels per day for the year, worldwide. Chinese oil demand, alone, has been revised down by 200,000 barrels per day for at least the first half of the year.
The coronavirus continues to impact the need for transportation and industrial fuels in China and other regions, as tens of thousands of flights to and from China have been cancelled. Last week, the Trump administration instituted travel restrictions that include banning foreigners who have been in China in the last two weeks from entering the U.S., except for immediate family of U.S. citizens and permanent residents.
In recent years, transportation fuels, and specifically jet fuel, have factored heavily in the growth of Chinese oil demand. Since 2003, China’s share of global jet fuel consumption has nearly tripled, to approximately 10% in 2019. The Chinese demand for fuel, brought on by airport expansions and an increase in air travel, has contributed so much to total jet fuel consumption that the effects of the coronavirus on China’s aviation sector is having an outsized effect on global oil demand.
Although the OPEC projections for negative growth due to the new coronavirus are limited mainly to the first half of the year, the organization’s monthly report emphasized the need for continuous monitoring and assessment of evolving situation in China to gauge its implication on this year’s oil market.
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