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International News

23 countries agree to join OPEC+ deal that will last until May 1, 2022

Russian energy minister Alexander Novak said Friday that following intensive talks OPEC and non-OPEC countries have agreed to cut production by 10 million b/d in May and June, in an interview aired on the Russia 24 TV channel.

Novak said 23 countries had agreed to take part in the cuts, which would remain in force until May 1, 2022. From July until the end of this year the combined cut would by 8 million b/d. From the start of 2021 until May 2022, the cut will be 6 million b/d, Novak said.
"It is important that we monitor the situation. It will, of course, change, and when necessary OPEC+ will take additional measures, or restore production," Novak said.
He added that the group should act in the interests of both producers and consumers to reduce market volatility.
Source: SP Global
Major crude storage hubs fully booked but not yet filled

The world is swimming in unwanted crude oil thanks to pandemic-related demand destruction yet some major crude storage hubs are still only virtually full as purchases from last month have yet to arrive, according to consultancy OilX.

Analysts and top trading executives see a demand loss ranging from just under 20 million barrels per day (bpd) to over 30 million bpd this month due to widespread lockdowns to contain the spread of the novel coronavirus.
To address the acute and unprecedented oversupply, OPEC and Russia will discuss record oil output cuts on Thursday to support prices hammered by the virus crisis.
The major Antwerp-Rotterdam-Amsterdam (ARA) hub was still well below capacity at just under 60 million barrels. The total is about 100 million barrels, OilX said on Thursday. OilX uses three different satellite systems to monitor storage rates.
Space has been rented out and more oil is expected to arrive as refiners bought a lot of crude before widespread lockdowns took effect. Similarly, utilisation of refined products storage in independent storage in ARA is still only at the halfway mark.
At South Africa’s Saldanha Bay, a key hub to store west African crude oil, the volume is slowly inching up.
As of Thursday, Saldanha had about 25.5 million barrels in stock out of a capacity of just over 50 million barrels. Oil storage capacity in the Saldanha Bay area was greatly expanded last year after new tanks came online.
OilX Chief Executive Florian Thaler said tankers carrying 6 million barrels of oil were en route to Saldanha.
Egypt’s Mediterranean terminal at Sidi Kerir that stores Middle Eastern grades was well above the three-year average at just over 12 million barrels out of more than 20 million capacity.
In China, stocks have spiked to over a 1 billion barrels in storage from just below 900 million in January, according to OilX data provided by SIA Energy.
Source: Hellenic Shipping
LNG Shipping Market: Shipping Cost Slightly Declining

LNG shipping cost comprises mainly of LNG charter rate and shipping fuel price. Over the past few months, it has represented up to 40% of LNG delivered price, depending on trade routes.

In 2019, the average daily LNG spot charter rate for steam turbine carriers fell to 48,800 USD/day, down by 7% y-o-y. The charter rate increased sharply in fall of 2019, driven by the approaching winter season, rising number of LNG cargoes, active usage of LNG carriers as floating storage and concerns about the imposition of the U.S. sanctions on COSCO shipping company from China. As a result, in October-November 2019 the average daily charter rate was at more than 84,000 USD/day. In the early 2020, the charter rate was a little bit higher than a year ago.
Market developments were impacted by two key factors. The first factor was the increasing number of LNG cargoes. In 2019, the global liquefaction capacity grew by 24 mtpa to 444 mtpa, driven by the commissioning of new LNG plants in the U.S., Australia, Russia and Argentina, with the latter joining the exporting club in June 2019. In addition, the global LNG exports grew by 38 mtpa to 355 mtpa. As a result, the total number of LNG cargoes reached 5,598, up by 11% y-o-y, which entailed the higher demand for LNG carriers.
The second factor was the supply-demand balance on the shipping market. LNG charter rate highly depends on the number of available LNG carriers. In 2019, 38 new LNG carriers were commissioned, which is lower compared to the record 50 carriers brought online in 2018. The global LNG fleet reached 556 carriers (Figure 2). Out of this amount, 240 were steam turbine carriers, 102 – Dual-Fuel Diesel Electric (DFDE) carriers and 77 – Tri-Fuel Diesel Electric (TFDE) carriers. Total capacity of all LNG carriers reached 39 mtpa, while the average capacity of LNG carriers equaled to 159,000 cubic meters (70,000 tonnes of LNG).
Meanwhile, in 2019 the average shipping fuel price fell to 406 USD/tonne, down by 8% y-o-y, mainly due to the decreasing global oil price. In the early 2020, the average price fell to the 2017.
The declining LNG spot charter rate and shipping fuel price entailed a drop in shipping cost for LNG spot cargoes. According to the GECF Shipping Cost Model (GSCM) developed fully in-house, LNG shipping cost from the U.S. to Japan fell by 0.24 USD/MMBtu to 1.76 USD/MMBtu in 2019 compared to 2018, while LNG shipping cost from the U.S. to the U.K. decreased by 0.11 USD/MMBtu to 0.85 USD/MMBtu. Despite this decline in the U.S. LNG shipping cost, pipeline gas and LNG supplies from traditional exporters such as GECF Member Countries have remained highly competitive.
In the short term, the commissioning of new LNG carriers, although unlikely to break the record number of 2018, is expected to be high enough to meet the growing LNG demand. However, spot charter rates might be volatile because of the shortage of LNG carriers on the spot shipping market. First, the start-up of various U.S. LNG plants requires more LNG carriers, since LNG deliveries from the U.S. to Asia entails longer trips. Second, current low LNG prices encourage market players to use LNG carriers as floating storage facilities. Third, the 2019 average LNG spot charter rate for steam turbine carriers equaled to the average medium- and long-term charter rates, estimated to stay at 50,000 USD/day and 45,000 USD/day, respectively. In this context, some market players could prefer to secure medium- and long-term charters to avoid possible volatility of spot charter rates, which would affect the availability of LNG carriers on the spot market and entail a rise in spot charter rates.
Meanwhile, the average shipping fuel price is likely to drop because of the combination of two major shocks that have characterized the beginning of 2020: COVID-19 spread and the failure of OPEC members and non-OPEC producers to agree on a further supply cut. While OPEC members and non-OPEC producers are making efforts to find a global solution for stabilizing oil market, the COVID-19 outbreak has largely harmed oil market, with global oil demand drop entailing a free fall of oil prices.
Consequently, the market might expect a further decrease in LNG shipping cost, which could encourage long-haul LNG supply and prop up LNG demand, which has been slowing down mainly because of the Covid-19 spread all over the world.
Source: Hellenic Shipping
European refiners leave oil cargoes on water as storage tanks fill

A growing number of oil tankers across Europe have been unable to unload their cargo over the past month as refining demand crashes, turning them into de facto floating storage, according to shipping data and trading sources.

European refineries have had to cut runs after measures put in place to contain the coronavirus outbreak crushed fuel demand.
More than 25 tankers with roughly 18 million barrels onboard were anchored near European ports, with most them already there for over a week as of Thursday, Refinitiv Eikon shipping data showed.
Many oil cargoes scheduled for late March or early April arrival were bought by refineries before the coronavirus pandemic paralysed business and social activity in Europe, traders said. But now the volumes are not needed.
“The refinery tells us they can’t take a cargo now. And it’s not very clear when they’ll be able to. It could take a month,” a source with a major oil company said.
Storage facilities in Europe are filling up fast, with traders saying nearly all tanks are already rented and leaving no option for the refineries other than to float the cargo until it can be offloaded.
AWAITING DISCHARGE
Full tankers are floating all over Europe, but the Mediterranean region, where refining run cuts have been higher, is harder hit.
Italy’s Trieste port, a Mediterranean oil hub connected to refineries in Austria, Germany and the Czech Republic by the Transalpine pipeline (TAL), has six vessels waiting to discharge, traders said and the shipping data showed.
“Delays in Trieste are above two weeks now for some cargoes. Some vessels discharge, but many are floating. And we see more coming”, a Mediterranean trader told Reuters. He added that the slower oil intake by refineries connected to TAL was disturbing pipeline operations.
TAL pipeline did not respond to a Reuters request for comment.
A number of cargoes floating outside other Italian ports including Milazzo, Vado Ligure and Genoa have been waiting for several weeks, four cargoes are facing weeks-long discharge delays in France’s Fos and delayed cargoes are also anchored around Turkey and Greece, the data shows.
“We’ve been waiting for…nine days,” a trading source selling to Mediterranean refineries told Reuters.
In northwest Europe the situation is generally better, traders said, but several vessels have been delayed in the last two weeks in the Antwerp-Rotterdam-Amsterdam hub and traders fear the number could rise.
“OPEC+ can try to establish market balance in the future, but it can’t solve the issue of a currently oversupplied physical market in Europe, it will be tough this month,” a trader with a major oil company told Reuters, referring to the grouping of OPEC countries and allies including Russia.
Source: Hellenic Shipping
Stolt-Nielsen: Coronavirus’ impact should be felt more in 2Q20

Stolt-Nielsen posts its 1Q20 results next Thursday. We reduced our estimates for the quarter due to Coronavirus, but slashed 2Q20 estimates much more, as the company adds the figures starting March to 2Q report. Nevertheless, long term estimates had less adjustments as we still anticipate the worsened situation to pass soon and the Chemical Tanker market to recover if not towards the end of 2020, then in 2021. Buy is reiterated at a lower TP of NOK 110/sh (140).

Some disruptions in 2019 were thought to be over until COVID-19 came
2020 was supposed to be the continuation of recovery for the company after some disruptions in 2019 caused by the US-China trade war and the explosion and fire onboard Stolt Groenland in September, but, as for most businesses, the Coronavirus mixed all the plans. We value two waves of the virus as unequal for the shipping segment and the 1Q20 (December-February) Stolt’s figures should feel the impact of the first wave – China’s ports closing. The second wave with China’s ports back on track, but the rest of the world’s being disrupted, should have a much more significant impact for the company’s 2Q20 (March-May) figures. On the other hand, reduction in bunker prices should have a positive impact on Tanker margins. We anticipate EBITDA for 1Q20 to be slightly below the USD 100m mark, while the bottom line is projected to be at around breakeven level with the serious breach in 2Q20, although it is almost impossible to predict the amount of the impact. We also decided not to show consensus expectations as the estimates are still not updated with the Coronavirus’ potential impact
Long term outlook remains positive
Newbuilding orderbook is still very low for 2021 and 2022, thus a favourable supply/demand balance for Tankers is seen during 2020 and beyond. The company believes in quick recovery of the markets although uncertainty towards the virus development remains. This of course means that IPO of the segment is postponed once again until the conditions stabilize. Stolt-Nielsen’s expectations towards Stolthaven Terminals were for similar revenues YoY in 2020 in the annual report, while we also expect the segment to be less impacted by the virus than Tankers. Tank Containers are talking about the long term geographical expansion, similar to Sea Farm that is planning to open a second farm in Portugal in mid-2020 and expects first production from recirculation farm in Spain in 2021.
Dividends withdrawn; our positive view towards the share retained
The Board of Directors voted to withdraw its previously announced recommendation of a final dividend for 2019 of USD 0.25 /sh. Dividends are delivered two times a year, so the total amount for 2019 remains at USD 0.25/sh.
As mentioned above, we made some significant downward changes to short term estimates, but our long-term positive projections remain and we reiterate Buy recommendation for the stock under the lowered TP of NOK 110/sh (NOK 140/sh previously).
Source: Hellenic Shipping
China’s Oil Imports Suffer From Sharp Drop In Economic Growth

China’s oil imports may have declined in March, a Reuters poll of 31 economists showed on Monday, while experts expect China’s economy to have sharply contracted in the first quarter of the year due to the coronavirus pandemic.

China, the world’s top oil importer and key oil demand growth driver, went in lockdown at the end of January and February to try to stop the spreading of COVID-19. As a result, demand for energy for industrial activity and for fuel sharply dropped.
Chinese oil imports held up in the first two months, because volumes had been contracted weeks before the first public announcement of the virus and because Chinese refiners typically stock up on crude before the Chinese Lunar New Year, which was at the end of January this year. China’s crude oil imports increased by 5.2 percent on the year in January-February to come in at 10.47 million barrels per day (bpd), according to Reuters calculations on data from the Chinese General Administration of Customs.
In March and early April, China was said to have been building its crude reserves, thanks to the cheapest oil in years, but the rate of filling storage would be lower than in previous years because of limited storage capacity, lending less support to oil prices this time around than in previous years, Wood Mackenzie said at the end of last month.
Source: Oil Price
Singapore oil trader Hin Leong faces liquidity issues as banks tighten credit lines

Singapore-based oil trading, storage and shipping company Hin Leong Trading (Pte.) Ltd. is facing liquidity issues and is unable to expand existing credit lines with its banks, according to multiple traders and market sources.

The liquidity issues come in the wake of a historic oil price crash that saw Brent crude collapse to less than $23/b from nearly $69/b at the start of this year, due to coronavirus-related demand destruction and the rift between Riyadh and Moscow that affected OPEC's production cuts.
Front-month June ICE Brent futures were trading just under $33/b Monday afternoon in Asia.
Traders said many market players were caught on the wrong side of the oil price collapse, as they had been stockpiling low sulfur fuels and middle distillates for weeks before the International Maritime Organization's new sulfur rules kicked in on January 1, 2020.
Hin Leong has been having difficulty issuing additional letters of credit for the last few days, and its counterparties are still watching the situation as it appears to be negotiating with its banks, a manager of a Singapore-based bunker trader that buys fuel from the company said, but declined to be named.
The source said since his company owes money to Hin Leong for bunker fuel purchases, it will be directly impacted by liquidity issues at the oil trader and it may choose to withhold payments until the situation is clearer.
Hin Leong did not reply to an email seeking clarification last week.
A source with Hin Leong said: "I don't know what's going on. You need to check with the people who are saying these things. Even with Hin Leong sometimes I don't know [what's going on]."
Separately, other market sources said Hin Leong's lenders, including banks, were discussing the credit situation or tightening credit and not extending any more credit without tangible collateral that can be easily liquidated.
"[Credit lines] are frozen, so they're not liquid," a source added.
Hin Leong is one of Singapore's largest homegrown independent oil traders that has operated as a family-run business under billionaire Lim Oon Kuin, also known in trading circles as OK Lim, who is a regular on the Forbes list of Singapore's richest people.
The Lim family operates a marine bunkering business under its subsidiary Ocean Bunkering Services (Pte.) Ltd., one of Singapore's largest tank farms under Universal Terminal, and a fleet of ships under its shipping subsidiary Ocean Tankers Pte Ltd.
Hin Leong was one of the first international companies to work with state-run PetroChina in oil storage and physical oil trading outside China, and has been a large-scale supplier of refined products in Southeast Asia, using its fleet of tankers for regional trade and floating storage.
Market participants raised concerns that major liquidity issues at Hin Leong could have a ripple effect similar to the collapse of OW Bunker a few years ago, which sent shockwaves through the bunkering industry, including ship arrests and payment disputes.
The repercussions could be much worse though as several oil traders risk similar losses running into billions of dollars, and given current market conditions, liquidity across sectors is drying up. But market participants also said a diversified company like Hin Leong has a much larger asset base like its tankers and storage facilities, and access to multiple options among Singapore's local conglomerates.
Source: SP Global
Shell offers LNG cargoes for 5 years from 2021 in unusual move

Shell has, in an unusual move, offered liquefied natural gas (LNG) cargoes for loading from 2021 onwards for a period of at least five years through a tender, three traders said.

The firm has issued a five-year strip tender offering four cargoes a year from 2021 onwards with an option to extend for another five years, two of them said.
The tender closes on May 18, they added.
The cargoes are likely for loading from Australia, one of them said.
Source: Hellenic Shipping
As Crude Oil Gets Hit Hard, Big Players Barrel Towards Bankruptcy

As these unusual times continue to wreak havoc across various industries, the energy sector hasn’t been spared. Oil prices have dropped significantly; by some estimates, it could fall as low as $20 a barrel. But perhaps more importantly, the demand for oil and gas is not nearly where it used to be.

Despite OPEC+ reaching an agreement to reduce crude oil production and effectively stop its price war, oil prices still fell. Countries are leaking big money — for instance, estimates have Russia losing some $100 million a day from not reaching an agreement to cut crude production sooner.
But on a smaller scale, companies are hurting too. Take Whiting Petroleum Corporation, one of the largest crude oil producers in North Dakota and a publicly-traded company that does over $2 billion in annual revenue. The company had to file for Chapter 11 bankruptcy protection just two weeks ago.
The issue for companies like Whiting that rely on crude oil is that profit margins are already fairly thin. In many cases, the break-even price point for American shale oil drillers hovers around $40 a barrel.
Forecasts aren’t looking too good either; some show demand could decrease by up to 30 million barrels a day, or approximately one-third of what it normally is. At this rate, oil companies need to be able to hit the brakes and cut production.
Not too long ago, crude oil businesses were riding high, growing accustomed to oil prices in the 60s per barrel. Now, it’s a matter of how many exploration and production (S&P) businesses can stay afloat, even if they conventionally have ample resources to do so.
Will many S&Ps go bankrupt in the next few years as a result? Pioneer Natural Resources PXD CEO Scott D. Sheffield thinks so, telling the Wall Street Journal “Probably 50% of the public E&Ps will go bankrupt over the next two years.”
One company investors are worried about is Chesapeake Energy CHK , a public company that has been on the Fortune500 list for 14 years and does well over $10 billion in annual revenue.
Today, investors are monitoring the company closely, on-edge about the possibility of the company also going bankrupt. It’s bad timing; the company has quite a bit of debt on its balance sheet — almost $9 billion of it coming into 2020.
The challenge? If companies can’t refinance debt or fail to meet their payback obligations due to slowed revenue, their bank accounts won’t last forever. Plus, lenders are now reducing borrowing capacity, making it even more difficult to inject cash as crude oil may continue to fall. Chesapeake has reportedly already hired restructuring advisors, which signals it may not be able to skirt Chapter 11.
If even large companies are facing major balance sheet challenges to stay afloat, we can only imagine how difficult it can be for relatively smaller companies that also rely on crude oil as a key revenue stream.
In these markets, nobody can definitively say how low oil can drop or when it will rebound. But among that uncertainty, there won’t be without bloodshed.
Source: Hellenic Shipping
Record oil output cuts fail to make waves in coronavirus-hit market

Falling oil prices on Monday showed that oil producers still have a mountain to climb despite record output cuts in an effort to restore market balance as the coronavirus pandemic shreds demand and sends stockpiles soaring, industry watchers said.

A day after the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia agreed to reduce output by 9.7 million barrels per day (bpd) in May and June – equal to nearly 10% of global supply – prices were little changed, oscillating in and out of positive and negative territory.
Both Brent and WTI have lost more than half of their value so far this year.
The headline cut by the producer group known as OPEC+ may be more than four times deeper than the previous record set in 2008 and could provide a floor for prices, but the reduction remains dwarfed by a demand drop predicted by some forecasters to be as much as 30 million bpd in April.
What’s more, governments around the globe are considering extending travel and social lockdown measures to prevent the coronavirus from spreading.
“Even if these cuts provide a floor to prices they will not be able to boost prices given the scale of inventory builds we are still staring at,” Energy Aspects analyst Virendra Chauhan said, referring to fast-filling storage amid the slide in demand from end-users.
“The absence of hard commitments from the United States or other G20 members is (a) shortcoming of the deal.”
G20 nations have been urged to help to reduce the supply glut, with non-OPEC producers expected to contribute to output cuts by another 5 million bpd, but there was little commitment after talks on Friday between energy ministers from the group and Saudi Arabia.
While the OPEC+ agreement is helping to stabilise the global oil market, “the deal failed to reach the reduction levels anticipated by the market, leading to oil prices remaining stagnant”, Takashi Tsukioka, president of the Petroleum Association of Japan (PAJ), said in a statement.
“We hope OPEC+ will continue their talks to stabilise oil markets,” he said.
Meanwhile analysts said that while the core number in the deal suggests a near 10 million bpd cut, Middle East producers such as Saudi Arabia, the United Arab Emirates and Kuwait will likely have to reduce by more than the 23% cut to which they signed up, as they had begun to ramp up output in April in a price war before the agreement was struck.
“This 9.7 million bpd ‘headline’ deal represents a 12.4 million bpd cut from claimed April OPEC+ production (given the Saudi, UAE, Kuwait ongoing surge) but an only 7.2 million bpd cut from 1Q20 average production levels,” Goldman Sachs analysts said.
FOCUS ON RESERVES
However, energy analysts at FGE expect oil stockpiles in developed nations to grow in the second quarter to levels last seen in 1982.
The next major focus for markets is watching for numbers from the U.S. Department of Energy on its strategic petroleum reserves (SPR).
A veteran Singapore oil trader, who declined to be named due to company policy, said inventory build will continue, albeit at slower pace because of the OPEC+ cut.
“Most of the SPR (held by countries around the world) are pretty full already. Probably China still has some room, but the rest, I doubt there is anything significant,” he added.
Highlighting the scarcity of available storage capacity, Australia’s Energy and Emissions Reduction Minister Angus Taylor on Monday said that the country is working on an agreement to buy oil and store it with the U.S. strategic reserves.
China, the world’s largest oil importer, remains the outlier. Its refiners are set to raise crude oil throughput this month by 10% from March as the country where the coronavirus originated at the end of last year recovers from the outbreak faster than elsewhere.
“China is unlikely to make any firm commitment, especially as Far East consumers are still paying a premium for Mideast supplies versus western consumers,” one Beijing-based state oil company official said on condition of anonymity, citing company policy.
“Outside the government reserve stockpiling, which is highly guarded information, commercial reserve managers at national oil firms will only look at the economics and tankage space available to decide purchases,” said the official, referring to commercial reserve departments under state refiner Sinopec and PetroChina.
These commercial reserve centres operate independently from the SPR, the official said, and often act as a swing supplier to state oil refineries by loaning crude to plants at a higher price and making a profit when retrieving them at a lower cost.
“China may be recovering, but China needs to export product to balance (its market), and therefore will ultimately be constrained given this is a demand, not supply-led issue,” said Energy Aspects analyst Chauhan.
Elsewhere, India is diverting 19 million barrels of Middle East oil from state-run companies to SPRs to help refiners to offload surplus oil, three sources said, declining to be identified, citing company policy.
Source: Hellenic Shipping
IMF slashes 2020 oil price forecast to $35/b as global economy set to contract 3%

Oil prices will average $35/b in 2020 as the global economy contracts 3% in the worst deterioration in economic conditions since the Great Depression in a best-case scenario and stay around that level for 2021, the International Monetary Fund said in its World Economic Outlook.

In its January report, the fund assumed an oil price of $58.03/b in 2020, and $55.31/b in 2021.
Oil prices are currently trading below the fund’s forecast despite the OPEC+ group agreement on Sunday to cut a record 9.7 million b/d in May and June this year and gradually decrease cuts through April 2022.
“The promised reduction in supply will help stabilize the market,” deputy director of the fund’s research department Gian Maria Milesi-Ferretti told a press conference on the report.
However future prices are unlikely to return to pre-coronavirus levels, the report said.
“Futures markets indicate that oil prices will remain below $45/b through 2023, some 25% lower than the 2019 average price, reflecting persistently weak demand,” the report said. “These developments are expected to weigh heavily on oil exporters with undiversified revenues and exports — particularly on high-cost producers — and compound the shock from domestic infections, tighter global financial conditions, and weaker external demand.”
Oil exporters in general will see their growth shrink 4.4% in 2020 due to the crude price crash, the report said. Oil exporters in the Middle East, and Central Asia region will see their economies contract 3.9%, with Saudi Arabia’s GDP shrinking 2.3%, the UAE 3.5% and Iraq 4.7%.
‘Worse outcomes possible’
The fund, which had projected a 3.3% growth in 2020 only in January, said the 3% contraction scenario was based on the pandemic subsiding in the second half of 2020.
“Much worse growth outcomes are possible and maybe even likely,” the IMF’s Economic Counsellor, Gita Gopinath said in a foreword for the report. “This would follow if the pandemic and containment measures last longer, emerging and developing economies are even more severely hit, tight financial conditions persist, or if widespread scarring effects emerge due to firm closures and extended unemployment.”
The fund was ready to use its $1 trillion in available financial resources to help member countries cope with the coronavirus outbreak, which is set cost the global economy a cumulative output loss in 2020 and 2021 estimated at $9 trillion, Gopinath told the press conference broadcast on the fund’s website.
“Some aspects that underpin the rebound may not materialize, and worse global growth outcomes are possible — for example, a deeper contraction in 2020 and a shallower recovery in 2021 — depending on the pathway of the pandemic and the severity of the associated economic and financial consequences,” the report said.
Advanced economies
Advanced economies will bear the brunt of the economic recession, by shrinking 6.1%, led by a 7.5% contraction in the eurozone and 5.9% contraction in the US.
“In parts of Europe, the outbreak has been as severe as in China’s Hubei province,” the report said. “Although essential to contain the virus, lockdowns and restrictions on mobility are extracting a sizable toll on economic activity. Adverse confidence effects are likely to further weigh on economic prospects.”
Emerging economies will suffer less and shrink by 1%, with China’s growth rate slashed to 1.2% in 2020 from 6.1% in 2019.
The global economy is expected to recover in 2021 if the pandemic fades in 2021, where growth will rebound to 5.8% “as economic activity normalizes, helped by policy support.”
2021 recovery
“A partial recovery is projected for 2021, with above trend growth rates, but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound,” Gopinath said.
The advanced economy group is forecast to expand 4.5% in 2021, while growth for the emerging market and developing economy group is forecast at 6.6%.
By comparison, in 2010 global growth rebounded to 5.4% from a 0.1% contraction in 2009.
“The rebound in 2021 depends critically on the pandemic fading in the second half of 2020, allowing containment efforts to be gradually scaled back and restoring consumer and investor confidence,” the report said.
Source: Hellenic Shipping
Jet demand to crash by 26% in 2020 on coronavirus, gasoline by 11%

Demand for transport fuels such as jet fuel and gasoline in 2020 will dive by 26% and 11% respectively exacerbated by heavy containment measures caused by the coronavirus pandemic, the International Energy Agency said Wednesday.

Jet fuel demand will average 5.93 million b/d in 2020 compared with 8 million b/d last year as the aviation sector is battered by the pandemic, the IEA said in its latest monthly oil market report.
The situation is expected to peak in April, when jet fuel demand will fall by 4.6 million b/d or 60%, a historic record, it added.
Total oil demand in 2020 is however expected to fall by a record 9.3 million b/d with a whole decade of oil demand growth poised to be lost in one year due to the massive demand destruction caused by the pandemic.
The height of the demand collapse will be in April, when consumption drop to 1995 levels, with demand falling by as much 29 million b/d year on year.
Gasoline, diesel impact
Demand destruction for gasoline, which accounts for almost a quarter of global oil demand, has begun to accelerate, with most of the world in lockdown.
The impact of these containment measures is likely hit gasoline the most on a volume basis, according to the IEA.
Gasoline demand in 2020 is now expected to fall to 23.50 million b/d from 26.4 million b/d in 2019, the Paris-based agency said.
Demand in April is estimated to fall 11.2 million b/d year on year, the largest decrease ever recorded by the IEA.
A modest growth in demand will slow the fall to 10 million b/d in May, it added.
Similar factors will weigh on diesel demand but not to the same extent, as a diesel is used in trucks and ships to transport goods, as well in the manufacturing sector.
Diesel/gasoil consumption is only expected to fall by 2 million b/d, or 7%, to 26.82 million b/d in 2020, as a result.
"While demand has no doubt been affected by containment, owing to the closure of shops, several basic activities and industries have remained open, thus providing a demand floor," it said. "These activities are expected to bounce back relatively fast, with governments in Europe already mulling the reopening of important industries.
H2 recovery
There will be some recovery in the second half of the year, but jet demand will still fall as much as 20% in this period as traffic only progressively returns to normal. Heating and cooking account for only 15% of overall jet/kerosene consumption and "will undergo little or no contraction," it added.
Jet fuel demand fell by 4% and 14% in January and February respectively according to IEA estimates. With the bulk of the world's aircraft fleet grounded, demand would have likely fallen by 27% in March, the IEA noted.
The jet fuel market has collapsed in the past few months because of demand destruction as the coronavirus outbreak has spread fast globally.
Jet fuel traders are putting it into storage to cope with the lack of prompt demand, as the whole supply chain is under stress.
More and more refiners are blending jet fuel into diesel to cope with the lack of demand, as middle distillates cracks have plunged on such a bleak demand picture.
Source: SP Global
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