Doha, March 2020
Europe May Close Down & China May Start Up
By end of March 24th2020, the major economies and energy consumers in Europe had locked down their populations in an attempt to slow down the spread of the COVID-19, corona virus. Whilst European energy consumption has plateaued or declined for several years; Europe is still a significant energy consumer.
From 2017–2019 Europe consumed 2051 million tonnes (mt) of energy in barrels of oil equivalent (BOE) terms. Of this, 742 million tonnes (BOE), was crude oil. This amounts to 15 million barrels of crude a day.
The International Energy Agency (IEA) forecasts that worldenergy demandwill reduce for the first time in decades. Europe’s oil and gas consumption will be impacted by the fact that renewable energy is taking a larger share of the market to meet the EU’s emission reduction targets and energy efficiency is increasing in all sectors and in particular the transport sector.
“The corona virus crisis is affecting a wide range of energy markets – including coal, gas and renewables – but its impact on oil markets is particularly severe because it is stopping people and goods from moving around, dealing a heavy blow to demand for transport fuels,” said Dr Fatih Birol, the IEA’s Executive Director.
Consequently, demand for gasoline and diesel will be particularly badly hit. Until Europe ends its lock down, experts forecast that European demand for crude oil may drop by 30% or more. There is also no upside for this analysis.
On the brighter side, China has just removed its corona virus related prohibitions on travel around many of its provinces. This will undoubtably allow China’s industry to recover. As China is the world’s largest consumer of energy, guzzling roughly 23% of the world’s supply, it is also a major user of crude oil. In addition, China is a major exporter of goods to Europe and indeed the world, so the rest of the world must recover before China can increase its demand.
Sources: BP Energy Statistics and IEA 2020 Outlook