Oil demand to reach pre-pandemic levels in mid-2022, analyst says

In 2016, New Jersey increased its gasoline tax by 23 cents per gallon.

Julio Cortez | PA

Travel resumes in the United States and Europe, but the rebound in global oil demand depends on the response of Covid-19 in Asian markets, according to Energy Aspects analyst Amrita Sen.

New Covid restrictions are in place in Southeast Asia, and this could delay a full return in demand for crude until mid-2022, she said during an appearance on “Closing Bell” from CNBC.

“Chinese demand is booming, but as we know India is struggling. Many other Asian countries are returning to lockdowns in one form or another,” Sen said Tuesday.

As India continues to fight a crippling second wave of Covid-19, new numbers of daily cases have increased elsewhere in the region. Over the past month, the total number of cases in Thailand, Vietnam, Cambodia and other countries has more than doubled, according to Worldometer data.

In response to the rise in infections, new restrictions, including business closures, have come into effect in some countries such as Malaysia, Thailand and Vietnam. The latter country was an outlier in mitigating the the disease spread in the first few days of the health crisis.

“The reality is that Asia is also quite obsessed with having zero cases, rather than learning to live with Covid, which the West does, like another flu effectively,” Sen said.

For the United States, commuting has yet to return to normal, but pent-up demand and discretionary travel, such as during Memorial Day weekend, are boosting gasoline demand, a said Sen.

But all eyes remain on Asian markets where some countries are facing vaccination challenges.

Malaysia, for example, has administered at least one dose of a vaccine to around 6% of its population, according to an Our World in Data tracker. During that time, about 40% of Americans have been fully immunized.

“The vaccination rates are low there, so we need Asia to get vaccinated,” Sen said. “This is when global demand can return to 2019 levels.”

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Felix J. Dixon