Por Bozorgmehr Sharafedin y Stephanie Kelly
LONDON / NEW YORK, Mar 30 (Reuters) – Renewed restrictions in Europe and a slow vaccination campaign are likely to halt a global recovery in fuel demand and cause OPEC + oil producers to take a cautious stance when the group reassess production policy this week.
Europe was fundamental in the forecasts of recovery of the demand thanks to its extensive vaccination program, especially since many Europeans hoped to return to normal by the boreal summer and to be able to take vacations abroad. That now seems unlikely.
Germany, Europe’s biggest oil consumer, has extended its restrictions until April 18 to contain a third wave of COVID-19.
A third of the French have entered a month-long lockdown, and most of Italy, including its capital Rome and its financial center Milan, has restrictions on business and movement. Closures have also been tightened in Austria, Norway and Switzerland.
When the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC +, meet this Thursday, it will be difficult for them to ignore the new measures, which most analysts had ruled out for the medium term due to their economic cost.
Given the steady gains in crude prices earlier in the year, OPEC + hoped it could ease production cuts, but industry sources now believe those plans are in jeopardy.
Renewed lockdowns and problems with vaccination could prevent the recovery of up to 1 million barrels per day (bpd) of crude demand in 2021, Rystad Energy said.
European cars are powered primarily by diesel and the region is a major importer of the fuel. However, the arrival of US diesel and diesel to Europe fell to zero last week in response to low demand, data from Refinitiv showed.
Arrivals in March are expected to hit a record low of 38,000 tonnes aboard a single tanker, according to Refinitiv, 85% lower month-on-month and 95% lower year-on-year. Arrivals in April are expected to be low as well.
A possible suspension of the summer vacation will only make matters worse and, without the expected recovery in air travel, refiners will have to divert more jet fuel to diesel tanks.
Energy Aspects expects European demand to be 800,000 bpd year-on-year in March, but expects demand to continue to recover and rise by 2.7 million bpd in the third quarter compared to the first three months of 2021.
(Reporting by Bozorgmehr Sharafedin in London, Stephanie Kelly and Jessica Resnick-Ault in New York and Florence Tan in Singapore; edited in Spanish by Carlos Serrano)