New Delhi: As the world continues to grapple to contain the novel coronavirus spread and government’s travel advisories cautioning people against travelling to the virus affected regions, S&P Global Platts on Friday estimated a potential aviation fuel demand projected a likely reduction in the aviation fuel demand between 50,000 barrels per day (bpd) to 150,000 bpd.
This comes in the backdrop of volatile oil prices, trade tensions and a slowing global economy, with the International Monetary Fund (IMF) on Monday slashing projected global growth by 0.1 percentage point for 2019 and 2020, and 0.2 percentage point for 2021.
“Although it’s still too early to make definitive estimates on oil demand and macroeconomic impact, we pencil a potential reduction of 50-150 MB/D in jet demand mostly for the next two months as Chinese Lunar New Year-related travel could increase the spreading of the virus," S&P Global Platts wrote in a report.
India has maintained that it has not detected any incoming air passenger with novel coronavirus as the World Health Organization (WHO) stepped back from declaring its outbreak in China as a public health emergency of international concern.
“Latest outbreak of coronavirus does not look as deadly as 2003 SARS, but oil demand impact could be significant due to surge in Asia’s aviation transport in past two decades," the S&P report said.
The SARS outbreak in 2003 was linked to the animal market in China and the H7N9, which spread in China in 2013, was linked to a market of live birds.
“With SARs-CoV, the economic impact was largely confined to Asia, with the global oil demand impacts estimated at the time at 230 MB/D, in 2Q03, and jet fuel absorbing most of the loss. The negative economic impact on emerging Asia was assumed to have been 0.5% of GDP in 2Q03, with 3% losses that quarter for Singapore and Hong Kong, and losses of 1% in Malaysia and Thailand. Average annual GDP growth in emerging Asia is thought to have only been reduced 0.2%," the report said.
Coronaviruses (CoV) are a large family of viruses causing illnesses from common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV). A novel coronavirus is a new strain that has not been previously identified in humans.
“We note that at that time the number of flights by Cathay Pacific and Singapore Airlines were reduced 37% and 20%, respectively, with overall Asian air traffic having though to have been reduced 10-15% at the peak. The rest of the world’s aviation traffic was assessed to have been reduced 2%," the S&P Global Platts report added.
The novel coronavirus was first identified in Wuhan, China, on 31 December. As on Thursday, more than 634 confirmed cases, and 17 deaths were reported, almost doubling the death toll in just one day, according to the United Nations News. The deaths have all been reported in Wuhan, which has a population of around 8.9 million.
“The coronavirus outbreak in China continued to rattle commodity markets Thursday, as the number of cases increased, as did quarantines, raising concerns of lower demand growth. Oil prices in particular have fallen over $3/b since Monday as the possible impact on jet fuel demand in particular comes into focus, recalling the impact of the Sudden Acute Respiratory Syndrome (SARS) virus on oil consumption 17 years ago," the report said.