Global Oil Demand at Risk into 2023

According to ESAI Energy’s vaccination analysis in its Five-Year Outlook for Global Fuels, by mid-2022, about ¾ of global oil demand will come from countries where immunization (from current COVID variants) has reached 60 percent and should no longer be at risk of lockdown or other actions that impact economic activity and oil demand. But global demand in its entirety probably will not reach that point until mid-2023. And even then, several countries may rely on natural herd immunity rather than vaccination.

ESAI has examined vaccination trends in the top 25 oil consuming countries, looking at case load, vaccine access, vaccine hesitation and government actions, in order to forecast vaccination rates. If effective national immunization occurs when 60 percent of the population is vaccinated or carries sufficient antibodies, at that point, the likelihood of lockdowns and diminished economic activity should drop considerably. This reduction in risk supports oil demand growth. Unfortunately, not all countries are on an easy path to 60 percent immunization. Moreover, some may never reach that level of immunization and will depend on natural herd immunity due to the spread of the disease.

“It seems clear that the threat to economic activity declines as vaccination rates rise, so we should be able to measure the volume of oil demand that remains at risk. Our analysis suggests the threat to global oil demand will last a while,” commented Sarah Emerson, ESAI Energy Principal.

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