Oil trading house Vitol says demand is down as much as 20%

Global oil demand has fallen as much as 20 per cent from last year as more countries lockdown billions of people inside their houses in a bid to halt the spread of the coronavirus, the world’s top independent oil trader said.

Russell Hardy, the head of Vitol Group, said that consumption of crude had dropped by between 15 million and 20 million barrels a day from the normal level of 100 million barrels a day. “Demand is down significantly,” he told Bloomberg TV on Wednesday. “Demand is going to be down for a decent period of time.”

The loss will continue at that level for at least a few weeks, Hardy said, contributing to an average annual decline of at least five million barrels a day, by far the largest the global oil market has suffered since reliable data is available from the early 1960s.

“There’s a lot of oil in the market and there’s a lot of stocks that we’re going to have to build, because it’s not going to be consumed,” he said, highlighting that the national lockdown announced on Tuesday in India has contributed to a fresh “substantial loss of demand.”

The oil trader estimates that gasoline demand is down 50 per cent in Europe and 35 per cent in the U.S. While diesel is less affected, jet-fuel consumption has “virtually gone” with six million barrels a day lost out of a normal level of 7.3 million barrels a day.

Vitol occupies a central position in the global flow of oil as the world’s largest independent energy trading house.

Hardy said that the only way to deal with the surplus was for refineries to cut their processing rates, and oil producers to reduce their own output, either willingly or via low prices forcing shutdowns.

Globally, refiners have already reduced the amount of crude they process by seven million barrels a day, Vitol estimates, and they will cut a further seven million through this week.

Despite already falling 60 per cent from January, Hardy said that Brent and West Texas Intermediate, the crude oil benchmarks, are going to come under further pressure.

Brent fell below US$25 a barrel in intraday trading last week, and WTI is now around US$24 a barrel.