Future oil product demand growth will never return to pre-coronavirus levels, Citi Research said, adding that oil prices were likely to fluctuate between $45 and $60 a barrel in the long term.
Global oil demand dropped sharply this year as a result of lockdowns imposed to contain the coronavirus.
“Not only will the world have lost 2+ years of demand growth, but the elasticity of oil product demand to global GDP will take a step-level change lower,” the bank wrote in a note published on Wednesday.
Jet fuel demand is unlikely to reach 2019 levels before 2023 as changing work habits, including telecommuting, and environmental regulations to limit carbon and other emissions will reduce demand for both jet fuel and gasoline.
In the short term, deep production cuts by OPEC+ and non-OPEC+ producers along with recent capex cuts and project postponements could lead to a short-lived supply crunch, Citi said.