As coronavirus shuts down economies, global oil use is headed for a record drop

No lines at Delta Air Lines counter at San Diego International Airport
Lines were virtually nonexistent at the Delta Air Lines counter at San Diego International Airport on Thursday.
(Rob Nikolewski / San Diego Union-Tribune)

Global oil consumption is in free-fall, heading for the biggest annual contraction in history, as more countries introduce unprecedented measures to fight the coronavirus pandemic.

Travel bans, work-from-home policies, canceled vacations and disrupted supply chains all mean reduced demand for fuel. As societies respond to the virus, oil demand — already hammered by China’s decision to shut down swaths of the economy — is falling further.

Many oil traders now think that demand, which averaged just over 100 million barrels a day in 2019, may contract by the most ever this year, easily outstripping the daily loss of almost 1 million barrels during the Great Recession in 2009 and even surpassing the 2.65-million-barrel pace registered in 1980, when the world economy crashed after the second oil crisis.

“This global pandemic is something the world hasn’t witnessed since 1918,” said Pierre Andurand, who runs oil hedge fund Andurand Capital Management LLP. “I do not see how the the demand drop wouldn’t be multiples of the drop witnessed during the global financial crisis.”

Oil prices have fallen by almost 50% this year as the virus’ worsening effects on the global economy coincide with a massive supply shock: Saudi Arabia and Russia are in an all-out price war to pump more crude. On Monday, Brent crude plunged more than 20%, the largest single-day drop since the Gulf War in 1991. Privately, some traders believe per-barrel oil prices could drop below $10 for the first time since the 1997-99 oil price war between Saudi Arabia and Venezuela. West Texas intermediate crude is now priced around $30 a barrel.

Goldman Sachs, which runs one of the largest commodity trading businesses on Wall Street, is now forecasting that oil demand will contract by more than 4 million barrels a day every month from February to April. Other investors see much larger demand drops in the short term.

Andurand estimates that demand could easily drop by 10 million barrels a day in this quarter and even beyond.


The accelerating plunge in oil demand offers a window into the worsening state of the world economy as governments in Europe and the U.S. impose restraints on social behavior that stop people spending money and moving around.

The anecdotal evidence of lower oil demand is everywhere:

Deutsche Lufthansa, the German carrier, said it could reduce its number of flights by as much as 70% in the next few days, while American Airlines Group Inc. will slash long-haul international flights by 75%, Delta Air Lines Inc. grounded as many as 300 planes and Air New Zealand Ltd. will slash its long-haul capacity by 85%.

Traffic congestion in cities from Seattle to Milan shows fewer journeys, according to data from TomTom International.

Restaurant bookings in New York, Boston, San Francisco and Seattle fell by as much 50% compared with a year ago, according to OpenTable, an online reservation service.

“We haven’t seen a demand event like this in history,” said Saad Rahim, chief economist at oil trading giant Trafigura Group. “Every day is going to be worse for demand for some time.”