Oil price path depends on Covid control

Global jet fuel consumption remains severely affected by the uneven recovery in aviation.

Globally, jet use has probably fallen by between 2 million and 3 million bpd compared with the last year, and the lack of aviation demand has become the single-largest loss of consumption in the oil market.

The deeper and longer slump in passenger aviation is the main reason petroleum consumption has recovered more slowly than OPEC+ anticipated earlier this year.

If passenger aviation reverts to more normal levels, it could boost global oil consumption by more than 2 million bpd, accelerating the rebalancing of the oil market.

But the timing and extent of any resumption in passenger aviation depends on the effectiveness and successful deployment of a coronavirus vaccine and other infection control measures.

Global oil consumption, and with it OPEC+ production policy, has therefore become dependent on the uncertain prospects and timing for a solution to the coronavirus crisis.

Jet consumption

Before the coronavirus epidemic, worldwide jet fuel consumption was running at around 7 million barrels per day (bpd), according to the US Energy Information Administration.

Of the total, roughly 5 million bpd was attributable to passenger services — with 2 million bpd on US domestic routes and 3 million bpd on international ones.

Like the rest of global trade, air freight has rebounded fairly quickly since the pandemic and lockdowns earlier in the year. The recovery in passenger aviation has been uneven because of quarantine restrictions.

Reuters