Middle East oil product demand is set to rise in the second quarter compared to the previous three-month period but consumption of jet fuel is expected to remain tepid amid lingering travel restrictions.
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Total oil product demand "will jump by 12% in Q2 from Q1 due to summer drive, increasing liquid burn in power sector as well as recovering industrial activities," said Zhuwei Wang, Middle East analyst with S&P Global Platts Analytics.
"Gasoil will have the highest demand in Q2 due to increasing road transport on recovering industrial activities and increasing liquid burn in power sector."
Saudi Arabia, the biggest Arab economy, is expected to have the highest oil product demand during the second quarter.
In addition to product use, crude burn in Saudi Arabia typically rises during the summer despite efforts to lower dependence on oil for power generation.
Direct use of crude in the second quarter of 2020 rose nearly 40% to an average of 1.2 million b/d compared with the previous three months, according to figures from Joint Organizations Data Initiative.
However, Middle East demand for jet fuel is expected to remain lackluster due to curfews and travel restrictions.
"Jet fuel demand will have the least growth compared with Q1 due to international flight restrictions," said Wang.
Middle Eastern airlines' demand was down by 81.6% in March 2021 compared to March 2019 amid continued travel restrictions, according to the International Air Transport Association.
Jet fuel demand will be anemic, despite the start of the Islamic Eid al-Fitr celebrations this week, when Middle East citizens and residents tend to fly during the long holiday.
Although Saudi Arabia will allow its citizens to travel abroad and is opening land, sea and air borders as of May 17, it has kept in place other travel restrictions.
In February, Saudi Arabia suspended entry for non-citizens from 20 states to contain the spread of the COVID-19.
The Saudi travel restrictions will dent travel demand in June and July, when pilgrims head to the birthplace of Islam for the annual Hajj pilgrimage, which is expected to start mid-July.
Saudi Arabia is still debating whether to allow pilgrims from outside the kingdom to participate in this year's Hajj season, which was restricted last year to residents and citizens in the country.
Only 1,000 residents and Saudis were allowed in 2020 to participate in Hajj. For the the previous Hajj the kingdom had hosted around 2 million Saudi and foreign pilgrims.
"For jet Q2, it is difficult to call as there is an increase in cases in India and some parts of the Middle East and governments may restrict travel and impose further restrictions," a regional jet fuel trader told Platts.
However, he expects improvement "in June but the focus is how fast Europe will recover and open for seasonal travel demand."
The UAE, the second biggest Arab economy that relies on international travel, is also suffering from weak travel demand.
Dubai International, the world's busiest airport for international travel in 2019, saw its passenger numbers plummet 68% year-on-year in the first quarter of 2021 due to continued fallout from the pandemic.
Dubai received 1.26 million tourists in the first quarter of 2021, a 67% plunge from the year-earlier period, official data showed.
The outlook for Dubai's travel market remains cloudy, though.
The UK, Dubai's fifth biggest tourist source market in Q1 2021, has put the city on the red list of countries when foreign travel resumes from the country on May 17.