Global travel restrictions encourage global fuel glut

With global chatter circling around the latest mass scale respiratory ailment, the coronavirus, there is global glut of petroleum fuels.  Like SARS, in 2003, the coronavirus is thought to spread through respiratory droplets being transmitted form one person to another (i.e., sneeze or cough).  With the potential for person to person transmission being so high, major travel has been hindered by the fear of either spreading or acquiring the new virus.  With more than 17,000 cases already and growing, there is now concerns on how to handle the temporary glut of fuels in the market.

OPEC+ has advanced the March meetings, to February 4th and 5th.   The advanced meetings will likely accommodate the excessive fuel supply by announcing a production cut.  With China being the world’s largest oil importer, and their slowed demand, OPEC is forced to make cuts.  Reports of as much as 1 million barrels daily could be cut from production.  Almost 30% of China’s flights have been cancelled, which accounts for 3% of the daily jet fuel demand.  Wuhan, China, is officially on a travel lockdown as well other cities in the surrounding areas.

Delta Air Lines has suspended flights to China from February 6th until April 30th. Major cruise lines are now implementing screening, prevention and control programs, while also denying travelers that have recently visited the Hubei Province.  The world’s largest fuel consumption occurs between a combination of shipping vessels and air traffic. Both are common ways to spread disease over vast distances, while being difficult to track and contain.

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