* COVID-19 is undoubtedly perhaps the biggest shock in the history of the oil and gas sector.
* The demand collapse has caused investments of $690 billion to disappear.
* The impact of the energy transition on long-term demand outlook highlight capital allocation and decision-making prospects in the present time.
* Read more by downloading the Africa Energy Outlook 2021 on energychamber.org. Engage with us on social media using #ChamberNews #ChamberEnergyOutlook2021

2020 has likely challenged the industry unlike any year in its history. A relatively stable growth in liquids demand has indeed been observed over the last 20 years. Even during the financial meltdown in 2008 and 2009, the demand overall was very resilient. In 2020 however, demand is currently expected to be about 10 million barrels of liquids less per day than pre-COVID-19 expectations

Intra year, this difference is even more extreme as the brunt of this reduction occurred during the widespread lockdown in the second quarter to halt the coronavirus outbreak.

Such a dramatic change to demand created shockwaves into the markets by putting enormous negative pressure on prices. Most notably, the West Texas Intermediary reference price even ended up trading at negative levels as there simply was no ability to store more oil. The market forces therefore led to widespread production shut ins in North America as well as an OPEC agreement to cut production by about 10 million barrels per day.

As such, the oil markets have now rebalanced but with significant available capacity offline. COVID-19 has triggered a big short-term negative revision in oil price expectation while the mid to long term outlook still points to an oil price at least north of $50/bbl based on the assumption that a solution will be found to the current COVID-19 pandemic, pushing global economic activity towards pre-COVID-19 levels.