BAKU, Azerbaijan, July 7
By Leman Zeynalova – Trend:
Fuel consumption will enjoy sustained recovery in markets with high vaccination rates, Joseph Gatdula, Head of Oil & Gas, Fitch Solutions told Trend.
“New variants are expected to continue to emerge with the Delta variant fast becoming the most dominate strain of Covid-19. Similar to the first year of the pandemic most countries are resorting to lockdown measures or restrictions to curb infection rates which have been shown to reduce fuel consumption in most cases. The severity of the lockdown measures has been linked to pace and magnitude of demand lost. At this point, markets without a significant vaccination effort (most emerging markets although much of Asia of DMs as well with the exception of China) are expected to enact or renew restrictions when infections rise,” he said.
Gatdula noted that however, in markets like the US, Canada, the UK and shortly Europe rising infections are not expected to bring further lockdowns as the vaccines have broken the link between infections and hospitalisations and death.
“This bodes well for a sustained recovery in fuel consumption for those fortunate markets with high vaccination rates. Oil markets will likely view the rise of a new variants with caution. It will depend on the new variants ability to escape existing vaccine protection which so far has not been the case. If vaccines continue to be effective then the outlook for a global recovery in oil demand looks to remain on track with most developed markets expected to rebound strongly in 2021 while emerging markets take a bit longer seeing their recovery shift into 2022,” the analyst concluded.
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