Impact of COVID-19 on Oil and Lubricants market

The Impact of the COVID-19 Pandemic on the Global Lubricants Industry 

By Ian Moncrieff and Milind Phadke 

 

Key Takeaways 

  1. COVID-19 could last from six to 18 months worldwide
  2. Economic impacts are already severe, and evolving national policies will impact the shape and duration of economic recovery
  3. Oil markets are in free fall, with transportation fuels hit hardest
  4. Based on our analysis of the market situation at time of writing this article, 2020 lubricants consumption could drop by at least 15%, and perhaps even up to 30%, from 2019 levels with PCMO most impacted
  5. Adverse lubricants market signals could extend beyond 2020 if COVID-19 persists or social distancing becomes embedded in corporate behaviors

Impact of COVID-19 on Oil and Lubricants market

How Did We Get Here? 

The COVID-19 pandemic, which started in China in November 2019, now afflicts much of the world. What will be its immediate and lasting impacts on the global economy and, specifically, on the lubricants industry? In a series of articles over the next weeks, Kline will analyze the impacts of this pandemic on various dimensions of the global lubricants, base oils, and additives industries. 

The story of the spread of SARS-CoV-2, the virus that causes COVID-19, has been widely told and does not need repeating here. What is now clear is that the virus is highly transmissible and has a higher mortality rate than seasonal influenza. There are currently no medicines or vaccines to fight the disease. The only effective weapon at present is social distancing, imposed by various means, to slow transmission of the disease. 

At best, it would seem that radical measures adopted worldwide could contain the impact of COVID-19 to mid-year (a lifecycle of a little over six months). Just as likely, based on the history of previoupandemics such as the Spanish flu and Swine flu, its extent could persist for up to 18 months, lasting into 2021. 

The Economic Consequences 

COVID-19, and the restrictions put in place to inhibit its spread, will have massive and potentially long-lasting consequences. Governments are responding with measures to stimulate economies, assure liquidity, and soften impacts on the...

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