A sudden drop in travel due to the coronavirus could cut demand for oil by more than 50 percent.
The analysis from IHS Markit, which studies the energy market, said the oil industry could take a sustained hit as people stay close to home and forgo typical commutes along with travel plans.
“A sudden drop in miles traveled by car triggered by social isolation measures will have immediate ramifications for gasoline demand,” IHS said in its assessment.
“The magnitude of gasoline demand decline will be much greater than the impact of the 2008 recession—and could be further protracted depending on how effective social distancing measures are,” it added.
The oil industry hasn’t just been hit hard by coronavirus implications. A trade feud between Saudi Arabia and Russia has led oil to drop to its lowest level in nearly 20 years.
But efforts to boost the industry by filling the U.S. petroleum reserve failed to get funding in the latest stimulus bills.
The low prices are likely to have reverberations elsewhere in the market.
Electric vehicle (EV) sales were down last year, a trend IHS expects to continue in the short term.
“We expect EV sales to stagnate in 2020 and likely into 2021,” the group wrote. “Global climate ambitions, however, are unlikely to be downgraded and will continue to support the path ahead for EVs over the longer term.”