COVID-19 Impacts on Global Oil Demand?

The impacts of COVID-19 on global oil demand are extremely uncertain. However, this model aims to help you bound the uncertainties, disaggregating 2020 oil demand in the developed and the developing world, as a function of some simplifying assumptions: GDP declines, flight cancellations, travel reductions and the pace of the crisis’s resolution.

Please note this model has been superceded by our more granular estimates, here. The model may still be useful  to stress test influences on quarterly oil demand due to different COVID-related variables.

COVID-19 Impacts on US Gasoline Demand?

US gasoline is the largest component of global oil demand, at c9Mbpd, or c9% of the global market. Hence we have modelled how it could be impacted by COVID-19, looking line by line, across a granular, c100-line breakdown.

A -2Mbpd contraction is possible in 2Q20, if 34% of all US workplaces close temporarily and 50% of non-essential travel is cancelled. This is an extreme scenario, commensurate with a c5pp slowdown in US GDP,  comparable to the “Great Recession” of 2008-09 in economic terms, but with 8x deeper demand destruction for gasoline.

Such steep declines are not inconceivable, from a modelling perspective. They could underpin a c10Mbpd YoY collapse in global oil demand.

How quickly could demand rebound? Very minimal long-term impacts persist from 2022 onwards, with demand destruction of just 60kbpd in 2023-24. We can even construct scenarios where US gasoline demand surprises to the upside, rising +0.5Mbpd, if COVID is brought under control. So when the oil market does turn, it may turn very quickly.

To run your own scenarios, please download the model.

Copyright: Thunder Said Energy, 2022.