Oil demandWhile the pandemic has affected all fuel types, the oil sector has been one of the hardest hit. Global oil demand declined by more than 16 million barrels per day in the second quarter of 2020, relative to 2019 levels. In the same period, oil demand in the United States – the top oil-producing country – fell by 4.4 million barrels per day. Demand had recovered slightly by the first quarter of 2021, down 5.1 million barrels per day compared with the same period in 2019.
While oil is used for many purposes such as powering machinery and heating homes, the biggest impact on the sector has been the restrictions on mobility. The aviation industry suffered greatly during the pandemic, with thousands of flights grounded throughout 2020. The global demand for jet fuel was 7.2 million barrels per day in 2019, but in 2020 this was more than halved to just 3.2 million barrels per day. Although international travel has started to recover in 2021, it is unlikely that jet fuel demand will recover to pre-pandemic levels until at least 2022. In contrast, road fuel is expected to recover far more quickly than aviation fuel demand. Road fuel demand in Europe fell 13% year-on-year in 2020 to 6.1 million barrels per day but is expected to increase to 6.6 million barrels per day in 2021.
The fall in demand also caused crude oil prices to drop to an all-time low, especially in the early stages of the pandemic in 2020. Despite the historic slump, oil prices had climbed back up to pre-pandemic levels by early 2021 due to rising demand and cuts in production.