Since oil demand started crashing amid lockdowns to contain the coronavirus, analysts have been trying to predict when demand will return to the pre-crisis levels, throwing in V, U, or L shaped forecasts. There is a growing consensus among major international forecasting agencies that a ‘return to normal’ oil demand will take longer than anticipated—probably until 2022. Many analysts believe that a V-shaped recovery for total global oil demand is not in the cards.

While oil demand for road transportation is showing signs of recovery–especially in China, which exited lockdowns first–demand for jet fuel will continue to drag on global oil demand for at least another two years. Permanent changes in lifestyle and possible reduced commuting in developed economies (with work from home now the norm rather than the exception) could also weigh on oil demand. Then there’s the recession with high unemployment rates and reduced manufacturing activity, which could also stall the recovery in oil demand.

According to the International Energy Agency (IEA), oil demand will take over a year and a half to (potentially) return to the levels before the pandemic.

Click here to read the full article.

Source: Oil Price