Measures to restrain the spread of Covid‑19 and the ensuing recession triggered an estimated 8.5 mb/d (8.8%) drop in oil demand in 2020 – the largest ever decline in both absolute and relative terms. The transport sector, responsible for around 60% of total oil demand, was severely impacted by mobility restrictions in 2020. Jet fuel and kerosene demand dropped by 3.2 mb/d (41%), with air passenger traffic 66% below 2019 levels, and gasoline demand declined by over 3 mb/d (12%). Fuel oil demand dropped by 0.5 mb/d (8%) as bunker fuel demand declined along with international trade. Continued freight transport activity mitigated the decline in gasoil demand to 1.8 mb/d (6%), and LPG/ethane and naphtha demand was roughly unchanged as petrochemical feedstocks benefited from increased sales of packaging, hygiene and medical equipment. 

The improving economic environment will support a rebound in global oil demand of 5.4 mb/d, or 6% above 2020 levels. Despite the rebound, demand across 2021 is expected to remain 3.2% below 2019 levels.

Covid-related restrictions on mobility continue to suppress oil demand for transport in the first half of the year, even if the impact is much less than a year earlier. Demand will rise progressively in the second half of 2021, as vaccination campaigns ramp up and travel returns. Nonetheless, oil demand is not projected to reach pre-crisis levels with demand in the fourth quarter of 2021 expected to be 1.4 mb/d lower than pre-crisis levels. International aviation's oil use is the slowest area to rebound and is expected to be 20% below 2019 levels even in December 2021. Excluding international aviation, oil demand is expected to return to 2019 levels in the last months of 2021.

China is the only major economy where oil demand in 2020 was above 2019 levels, and demand in 2021 is expected to grow further to almost 9% above 2019 levels. Oil demand in China fell 1.3 mb/d in Q1 of 2020 as the virus hit China and mobility was curtailed; however, removal of restrictions and a sharp economic rebound through the rest of the year saw oil demand return to growth. Without the increase in demand in China in 2021, global demand would be an additional 1 mb/d, or a further one percentage point, below 2019 levels.

Oil demand in the United States is expected to remain around 0.8 mb/d below 2019 levels, mainly as a result of the continued impact of the pandemic-related restrictions during early 2021. Demand in the European Union remains 0.4 mb/d below 2019 levels, with continued lockdowns expected to weigh heavily on 2021 annual totals. In India, after further lockdowns in the first half of the year, rapid demand growth in the second half of the year is likely to push 2021 oil demand back on par with 2019 levels.

Gasoline demand is set to increase by 1.8 mb/d in 2021 to reach 25.4 mb/d, even if it will remain 1.2 mb/d below pre-Covid levels. Demand is set to be 2 mb/d below 2019 levels during the first half of 2021 and, while demand should rise in the second half as restrictions are eased, it is expected to remain around 500 kb/d below pre-Covid levels. Behavioural changes from the Covid crisis, such as increased teleworking or greater use of bicycles in cities, outweigh greater preference for private cars vs. public transport in certain regions.

Diesel demand is set to rebound by 1.5 mb/d to 28.5 mb/d in 2021 and should remain 0.3 mb/d below 2019 levels. Diesel is less impacted by restrictions on mobility because trucks have operated at near-normal levels as demand continues for goods held up during the pandemic. New Covid restriction measures implemented in 2021 are not anticipated to restrict manufacturing and the transportation of industrial goods.

Jet fuel and kerosene demand has been the oil product most affected during the pandemic. Air traffic is expected to recover slowly in the first half of 2021 and pick up in the second half when vulnerable populations in the developed world have been vaccinated. Pent up demand could push revenue passenger kilometres (RPKs) up by 50% y-o-y. In this case, we expect total jet fuel and kerosene demand to increase by 0.8 mb/d on 2020 levels in 2021, a rebound of 17%. Despite this growth, demand would still remain 30% below 2019 levels.  

Petrochemical feedstock will be the only oil sector to surpass pre-crisis levels with plastics production driven by increased needs for packaging and personal protective equipment. We expect LPG, ethane and naphtha demand to increase by 0.8 mb/d in 2021 (4%).

Fuel oil demand will increase by nearly 0.3 mb/d in 2021 (4.5%) as it is expected to benefits from a rebound in bunker fuel demand and higher industrial activity. Most of the growth will be for the new, very low sulphur fuel oil introduced by International Maritime Organisation regulations.