BIMCO’s Shipping Number of the Week: Global oil consumption to rise by 5.8m b/d in 2021, falling short of 2017
On 8 December, the U.S. Energy Information Administration (EIA) estimated that the global consumption of oil will reach 98.2 million barrels per day (m b/p) in 2021, a 6.3% rise, 5.8m b/d on average, compared with the same figure in 2020. The good news is quickly soured however, as the 2021-level will fall short of the 2019 oil demand by 3 million barrels per day. A full recovery is therefore currently out of sight. In fact, it will fall short of what was consumed in 2017, 2018 and 2019.
While oil tanker freight rates were spectacular from early March to early May 2020, they are all below the break-even marks by 10 December 2020.
An uneven recovery that changes trade patterns
The EIA expects however that the combined group of nations: China, India, Middle East, and other non-OECD members will fully recover demand in 2021 that was lost in 2020. This is in striking contract to the group of nations: United States and other OECD members, where the recovery of lost demand at best stand to be 50% in 2021.
“The expected uneven recovery in oil consumption and economic activity will change the trade patterns of the global oil tanker industry.
It will not be a swift return to business-as-usual, and chartering activity will look quite different to that of pre-pandemic 2019.
Making the recovery potentially tougher for tankers is the massive inventory builds during the first half of 2020,” says Peter Sand, BIMCO’s Chief Shipping Analyst.
“It is not hitting the industry like a boomerang, but an inventory built represents future oil demand already in the right place for future consumption. Thus, fewer cargoes will be transported than would otherwise be needed if stocks were not bloated,” says Sand.