It will take three years for global oil demand to rebound to pre-pandemic levels, as jet fuel consumption continues to trend much lower than last year’s levels, according to Bank of America Securities.
While road fuel demand has recovered to nearly pre-COVID-19 levels, aviation fuel demand is struggling to take off materially as air travel is still significantly down compared to ‘normal’ levels from before the pandemic, Bof
AS said in a weekly energy reported carried by Trade
Arabia.
Air travel will not rebound until an effective vaccine or cure for COVID-19 is rolled out, the Bof
AS analysts said. An effective vaccine, however, is still 12 to 18 months down the line, according to the bank.
Data from global flight tracking service Flightradar24 showed last week that in August, commercial flights made it up to 45.2 percent below August 2019 levels, but grew at a much slower pace than June and July.
If a vaccine is rolled out at the end of 2021, air travel would recover to 75 percent of pre-crisis levels in 2022 and to 90 percent of the typical consumption level in 2023, Bof
AS says.
For the longer term, the bank sees global oil demand peaking at some 105 million barrels per day (bpd) in 2030, due to the rising share of electric vehicles (EVs) in light duty vehicle sales. Bof
AS’ base-case scenario is EVs taking a 34-percent share of light vehicle sales by 2030 and 95 percent of sales by 2050.
Hydrogen fuel cell vehicles could also displace part of oil demand for transportation, especially if green hydrogen prices fall materially, according to Bof
AS.
In the near term, oil demand recovery appears to have stalled, due to weak refining margins, a lack of recovery in jet fuel demand, and uncertainties over global economic growth, including in the world’s top oil importer, China, the International Energy Agency’s (IEA) Director for Energy Markets and Security, Keisuke Sadamori, said earlier this week.
In a sign that demand recovery is faltering, the world’s top oil exporter Saudi Arabia cut its official selling prices for crude oil for October.
“Clearly this suggests that the market is not tightening as quickly as many had anticipated, with supply edging higher, and with demand clearly faltering,” ING strategists Warren Patterson and Wenyu Yao said on Tuesday.
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