*Brace for the Second Wave
As the British Prime Minister, Boris Johnson, warns the country to start to prepare for a second wave of the virus after implementing quarantine measures on visitors from mainland Spain, so too the oil industry is warning of yet more disruption to come. Top US and European oil companies are forecasting second quarter losses as the crushing of demand eats away at profits. Data from Refinitiv Eikon notes that BP, Chevron, Eni, Exxon Mobil, Shell and Total are all expected to show losses. BP and Shell have already downgraded their long-term oil price outlooks, flagging non-cash impairments of $13-17.5 billion and $15-22 billion for the second quarter, respectively.
*China Developing Iranian Supergiant Oilfield
It has been announced that China is investing in a $1.3 billion development of the South Azadegan oilfield, which will more than double its current production levels. In the context of American sanctions – which has technically bankrupted the Middle Eastern country – this seems a bold decision. However, with China trying to assert itself against American hegemony this could be an even more politicised investment to build on its already extensive Belt and Road initiative. This news story is not going to be the title of Muse’s next hit single, but it will definitely put China in the Iranian regime’s good books, driving it further away from an already despised America.
*Jet Fuel Crisis for Years
A slow recovery in the air industry could have repercussions for oil demand. Bank of America are estimating that the full recovery could take until 2023, with it taking to 2021 to see any meaningful recovery in demand. It is estimated that putting in measures for safe air travel could take years, with a vaccination of the 2 billion people in China and the developing world taking a year and a half alone. In the United States, jet fuel consumption is down by 31 percent, or by 540,000 bpd, this year compared to the 2019 average of 1.2 million bpd, the EIA has reported. So, a return to pre-virus levels of oil demand could be hampered by sectors like the air industry.