Global jet fuel demand is likely to see a dramatic drop possibly by up to 70% especially in the second quarter of 2020 as an increasing number of countries apply travel quotas to prevent the spread of the novel coronavirus (COVID-19), experts foresee.
Cuneyt Kazokoglu, director of Oil Demand at London-based Facts Global Energy (FGE), an energy consultancy, told Anadolu Agency that air traffic is constantly decreasing and could even come to a halt.
According to Flight Radar 24 data, the number of daily flights on Feb. 21 was 196,756 but by March 22, this dropped to 102,181, marking a 48% decrease in a month because of the suspension of flights amid the global pandemic. Furthermore, by March 24, daily flights were down to 95,227.
“This trend of decrease in the number of flights will directly impact jet fuel consumption. We forecast that global jet fuel consumption could fall by up to 70% in the second quarter of the year,” Kazokoglu said.
Given that government leaders and academic studies have indicated that the COVID-19 crisis could last from 12 to 18 months, airline companies, tourism, entertainment and food sectors will be damaged, he said.
Kazokoglu also drew attention to the decline in oil consumption since the virus outbreak, which he said would continue due to lower jet fuel demand.
“Global jet fuel demand corresponds to 8% of the world’s daily oil consumption. Even if global jet fuel demand falls by 50%, this corresponds to 4% of oil demand, or 4 million barrels a day,” he said.
Global jet fuel demand averages at around 7.5 million barrels per day.
Gasoline and diesel consumption will also see a huge fall in 2020 as countries apply limited movement or curfews and with the slowdown in factory production, he said.
A varying chain of forecasts shows that global oil demand could decline by 12-20 million barrels per day due to the spread of the novel virus.
The number of cases from COVID-19 exceeded 380,000 by March 24 while the death toll climbed to 16,559.
“We believe that global GDP will grow by less than 2% this year as a result of travel restrictions resulting in 2.8% global oil demand drop,” Artyom Tchen, senior analyst at Norway-based energy research company Rystad Energy.
He maintained that some highly leveraged European companies will be heavily impacted as they will be squeezed both by domestic and transatlantic restrictions.
“We think that the seasonal recovery will start on June 20 if travel restrictions in Europe and eventually in the U.S. bear fruit. Still, it is tough to see a year-to-year growth relative to 2019 in jet fuel demand for any month this year,” he said.
Flight cancellations are now piling up not only for April and May but also likely for the second half of the year amid the uncertainty, he said.
“We cannot move Chinese Lunar New Year Holiday, Easter to the second half of the year, so I am afraid jet fuel demand pertaining to travel during those holidays was lost indefinitely this year,” he concluded.
Source: The Sun