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Jet fuel demand will be the hardest hit fuel sector as the coronavirus outbreak spreads across the world, countries impose travel restrictions, and airlines continue to cancel thousands of flights, Rystad Energy said in a new report on global demand for oil and fuels.
Jet fuel demand is set to slump by 11 percent year on year in 2020, from last year’s demand of around 7.2 million bpd. Global air traffic is expected to plunge by 16 percent on the year, according to Rystad.
“US President Donald Trump yesterday announced a ban on air travel between Europe and the US, which will further impact an aviation industry that has already been suffering as the virus has spread. Many distressed airlines will now face heavy cost cuts, and many non-profitable routes are likely to be closed,” the analysts noted.
Rystad Energy now expects global oil demand to drop by 600,000 bpd this year, or by 0.6 percent, compared to 2019.
“This is a severe downgrade compared to previous estimates and takes into account the quarantine lockdown in Italy, massive cancellations of flights by airlines, the travel ban between Europe and the US that was announced yesterday, and our simulations of the virus’ growth patterns this year,” the energy research and analytics firm said.
Major organizations and international bodies have already dramatically cut expectations for this year’s global oil demand as the Covid-19 outbreak results in restricted travel and slowing economic activity.
OPEC, for example, now sees global oil demand rising by mere 60,000 bpd in 2020 after it has slashed its forecasts by 920,000 bpd from just a month ago.
The International Energy Agency (IEA) warned this week that oil demand was set to drop this year for the first time since the financial crisis in 2009 due to the coronavirus outbreak and its impact on economies. The IEA now sees global oil demand falling by 90,000 bpd year on year in 2020.
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.