Oil demand could plummet 20% due to coronavirus fallout
Illustration: Sarah Grillo/Axios
Analysts and oil industry officials are racing to keep up with how much oil consumption is falling as more countries and regions impose restrictions.
What's new: This morning Russell Hardy, CEO of oil trading giant Vitol, said he sees demand loss peaking at 15 million–20 million barrels day over the next few weeks. That's in the context of a roughly 100 million barrel per day market.
- He told Bloomberg TV that he sees a 5 million barrel per day decline on an annualized basis.
- But Hardy also cautioned that there's obviously uncertainty about when demand will start to pick back up.
The bottom line: "It's pretty huge in terms of anything we've had to deal with before," he said.
Where it stands: That's just one metric of how coronavirus and the collapse of the Saudi-Russia output limiting deal is rapidly transforming the oil landscape — and creating economic jeopardy.
Threat level: Rystad Energy now estimates that over 1 million jobs in the oilfield service industry are likely to be shed this year, representing about 21% of its global workforce.
- The sector currently employs about 5 million people worldwide, according to the consultancy, but will be hard hit by the price collapse.
- "Some 13 percentage points are attributed to oil-price-driven cuts and the remaining 8% reductions will be layoffs caused by measures taken by contractors who are forced to slow down project developments fearing the spread of COVID-19 on their worksites," they said in an analysis Wednesday.