Airline travel will continue to suffer in the first half this year and will only recover, and jet fuel consumption with it, in the back half of 2021, when mass vaccinations are poised to allow traveling to more destinations quarantine-free, according to the world's largest independent oil trading firm, Vitol.
Vaccination passports could be inevitable for the tourism and airline industries to rebound from the pandemic hit, Mike Muller, the head of Vitol's operations in Asia, said at the online Gulf Intelligence conference, as carried by Bloomberg.
Until a critical mass of people are vaccinated, and probably 'vaccination passes' are introduced, jet fuel demand will continue to be a drag on global oil demand recovery, according to Muller.
"Until there's a roll-out and until we introduce the inevitable -- which is, alongside your regular passport, probably a vaccination pass -- this demand is not set to recover," Muller said, noting that holiday booking activity in all regions, including the Americas, Europe, and Asia is "all flat on its back still."
Jet fuel demand will not recover to pre-crisis levels by the end of this year, and at the end of 2021, it will still be 1 million barrels per day (bpd) to 2 million bpd lower than what was before the pandemic, Vitol's chief executive Russell Hardy told Bloomberg in an interview at the Gulf Intelligence conference.
Continued low demand for jet fuel will account for 80 percent of the 3.1-million-bpd gap in oil demand this year compared to pre-pandemic levels, the International Energy Agency (IEA) said last month. The IEA expects global oil demand to rebound in 2021 and rise by 5.7 million bpd compared to 2020 levels. Yet, this is a smaller rebound than earlier expectations because of continued weakness in the aviation sector, the IEA said in its latest monthly report.
Vitol is a bit more optimistic about global oil demand growth this year, with Muller expecting oil consumption to rise by over 6 million bpd in 2021 from 2020.
More production from OPEC will be needed later in 2021, and probably more production out of the United States, Vitol's CEO Hardy told Bloomberg.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More