China’s oil demand is recovering, while external risks ramp up

China’s oil demand will recover to 13 million b/d in Q2 2020, still 2.5% below Q2 2019. The pace of recovery will vary by products. • Gasoline demand returns to last year’s levels in June 2020, as the restrictions are progressively lifted since April. • Diesel/gasoil demand recovers in Q2 as well, supported by increasing industrial and road freight activities. • Jet fuel demand was most impacted, and the recovery is the slowest. We expect an even larger decline for demand in Q2 than Q1. Extended international flight bans and mandatory quarantines slow the recovery of jet fuel in 2020. Risks remain skewed to the downside to our outlook, depending on the status of the global pandemic and a potential risk of second wave of infections in the economies coming out of lockdown, including China. If the pandemic continues globally, the strict border controls by China will restrain aviation. Moreover, the ongoing global economic recession pressures China’s export potential through to 2020.