FX.co ★ COVID-19 and oil: 7 nations with recovering demand

China

China has been a leader among countries with rapidly reviving economies. In fact, it was able to recover from the pandemic-induced crisis faster than any other Asian nation. As a result, the state of China's oil sector improved. The country regained the status of the world's largest oil importer. When the pandemic eased its grip on China, mobility of its citizens increased. Eventually, fuel prices in China returned to pre-pandemic levels.

India

India is the second country where the negative consequences of the COVID-19 pandemic did not prevent the oil industry from recovering. Amid the outbreak of the virus, fuel demand fell significantly and the health care system was paralized. In May 2021, the price of petroleum and diesel fuel plummeted despite the fact that the local mobility rate remained high. Previously, India’s traffic was 57% from the pre-pandemic level. On top of that, manufacturing activity also decreased. According to preliminary forecasts, demand for petroleum in India could plunge by 150,000 barrels per day.

Malaysia

Malaysia is ranked third among nations that managed to cope with the consequences of the pandemic and whose oil industry revived. Due to the widespread tightening of quarantine restrictions, oil demand slowed down along with traffic. In May 2021, the local population mobility was 78.5% compared to the pre-pandemic level. At the same time, activity in the manufacturing sector decreased. A national lockdown in Malaysia has been introduced until the middle of June. As a result, consumption of diesel fuel, as well as manufacturing activity, sagged. A successful COVID-19 vaccine rollout is expected to increase fuel demand.

Indonesia

Indonesia is the fourth in the list of countries with a rapidly recovering oil sector. According to Pertamina Patra Niaga, rising petroleum and diesel fuel consumption boosted demand by 4-5% in May 2021. Anyway, it is believed to be a seasonal spike in prices. This month, however, demand is projected to fall. Based on the Apple survey, the country’s traffic was heavier last month than before the pandemic, while manufacturing activity was at a higher level than in April 2021.

Japan

Japan is the fifth state in our list of countries that strive to cope with the blow delivered to the oil industry by the pandemic. The country’s government has recently extended the COVID-19 state of emergency until June 20th. Japan has faced a double recession. In May, traffic in the country was above the pre-pandemic level, while activity in the manufacturing sector dropped slightly from April. Japan’s oil refinery has recently been actively purchasing crude oil.

South Korea

The sixth nation in our ranking is South Korea. In May, the country’s traffic was around 69% from pre-pandemic levels. At the same time, South Korea’s activity in the manufacturing industry has decreased for the second straight month. According to experts’ estimates, the country’s recovery after the COVID-19 pandemic was slow and challenging.

Australia

Australia closes our top 7. In fact, its economy was steadily recovering in the first quarter of 2021 owing to severe COVID-19 restrictions and growing oil imports amid old refineries shutdown. As a result, local inventories expanded. According to Apple, Australia’s traffic has returned to the pre-crisis level since November 2020. Wood Mackenzie analysts assume that demand for petroleum and diesel fuel in the country will soar by 10% in 2021. Consumption of petroleum products in the Asia-Pacific region is believed to surge by 14 million barrels per day in the second quarter of 2021.