Oil demand recovery hinges on jet fuel: Vitol

The speed of recovery in jet fuel consumption will be the single most important factor influencing oil demand growth this year, but reaching pre-pandemic levels by the end of 2021 is unlikely, according to trading firm Vitol.

"We will not leave this year in the same way we left 2019 in terms of aviation demand," Vitol's chief executive Russell Hardy told the Gulf Intelligence Global UAE Energy Forum today. "It is likely that we exit 2021 with jet demand still 1mn-2mn b/d below pre-pandemic levels," he said.

Hardy did not say when he thinks jet fuel demand will fully recover. But Mike Muller, head of Vitol's business in Asia, told the same conference that he thinks jet demand in Asia will only begin to rebound towards the end of the third quarter once a significant enough portion of society has been immunised against Covid-19.

"By then it is likely that we'll have sufficient immunisation or herd immunity, or a combination of people who have suffered and already had the virus and who have been immunised," Muller said. "That is my hope, but I do think it will take until late in the third quarter."

Muller said he expects overall oil demand to rise by 6mn b/d this year, only partially reversing a 9mn b/d slump in demand last year.

Jet fuel demand has been hit particularly hard by the Covid-19 pandemic, with border closures and international flight suspensions causing an unprecedented collapse in consumption. While the start of vaccination programmes has offered the aviation sector some hope, the International Air Travel Association (Iata) said in November that it does not expect global air passenger numbers to return to 2019 levels until 2024 at the earliest. Iata expects 2.8bn passengers to travel in 2021, 1bn more than in 2020 but 1.7bn fewer than in 2019.

By Sarah Raffoul