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Oil Demand Outlooks in Times of a Market Dislocation:

Non-Traditional Metrics as a Bellwether for 5 Million Barrels Missing from Transportation Fuels Demand

Introduction:

? As every year, final and aggregate 1Q21 demand data will not be available until May, but mobility trackers provide leading indicators of the trajectory of demand for transportation fuels, a critical sector for oil demand which was disproportionately hit by COVID-related restrictions.

? Global oil demand fell by approximately 25 percent in "black April" to levels last seen in 2002. The ensuing recovery has been equally spectacular, but the `last mile' has been slow and uneven. In times of market dislocation, the combination of these trackers with other metrics can help model transportation demand, improving transparency and timeliness of data for better supply and investment strategies.

? This report assesses gasoline and diesel demand's recovery through 1Q21 using JODI Oil Database, Google's Community Mobility Tracker and Oxford's COVID-19 Government Response Tracker. The IEF combined data from JODI, Google's Community Mobility Tracker, and Oxford's COVID-19 Government Response Tracker to assess gasoline and diesel demand's recovery.

? In China, in the absence of public real-time mobility data or data on CO2 emissions, we have used Oxford's COVID-19 Government Response "Stringency" Tracker to estimate mobility.

? For now, vaccinations are a weaker metric to extrapolate transportation fuels demand, and therefore oil demand recovery. We will continue monitoring these different metrics during the remainder of 2021, particularly in relation to Ramadan and summer vacation travel patterns.

Key Findings:

? Gasoline and diesel demand rebounded to ~93% of pre- COVID levels in March 2021 from ~87% in January 2021. ~35% of the volume gains in those two months were driven by the US and India.

? Mobility in many European countries lags 20-40% below the January 2020 baseline. ? In China, Oxford's COVID-19 Government Response "Stringency" Tracker fell during March

2021 below summer 2020 levels. This implies a serious pick-up in transportation demand, after passenger traffic declined 45% last year. ? The lion's share of missing demand is jet fuel, and it is expected to remain at 5.5-5.7 mb/d during the first half of this year, vs 7.9 mb/d in 2019. ? The increasing disparity between regions and countries in terms of effectiveness of government response means that domestic and regional flights are picking up only slowly. ? Transportation fuels demand is still down 5.2 mb/d (2.8 mb/d for gasoline and diesel and 2.4 mb/d for jet fuel) below pre-COVID levels and could reach pre-COVID levels in 2022 on aggregate.

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JODI data shows gasoline and diesel demand in January near 87% of 2019 levels

As of March, the JODI Oil Database has January gasoline and diesel demand for only 52 of 117 countries and December demand for an additional 13 countries, collectively representing ~80% of global demand. Gasoline and diesel demand in this subset returned to 39.3 mb/d in January/December, down ~13% from 45.7 mb/d in 2019, but up ~19% from 33.1 mb/d in April 2020.

Demand patterns have been uneven and asynchronous. April 2020 saw the lowest aggregate monthly demand but not all countries bottomed then. Among the top 20 gasoline and diesel consuming countries, India has made notable recovery since last April from 1.1 mb/d in April 2020 to 2.4 mb/d in January 2021. However, demand has plummeted to a new COVID low in Germany and remains near April lows in the UK.

Demand in kb/d Jan-19 Feb-1 9 Mar-19 Apr-19 May-1 9 Jun-19 Jul-19 Aug-1 9 Sep-19 Oct-19 Nov-1 9 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20

Largest 20 Demand Markets: Combined Motor Gasoline and Diesel Demand

45000 40000 35000 30000 25000 20000 15000 10000

5000 0

Source: IEF, JODI Oil Database

Pola nd Turkey Thailand Ko re a

Italy Spa in Australia UK

Saudi Arabia In do nesia F ra nce Mexico

Ca nad a Russia Germany Brazil

Japan India China USA

2019 Average

Largest 20 Demand Markets: Combined Motor Gasoline & Diesel Demand April 2020 vs. January 2021

% of 2019 Annual Average Demand

Korea, 94% Indonesia, 92% Germany, 91%

China*, 88% Thailand, 87%

Japan, 84% Russia, 83% Brazil, 83% Poland, 80% Australia, 77% Turkey, 71%

USA, 70% UK, 67%

Saudi Arabia, 64% Canada, 62% France, 58% Mexico*, 57% Spain, 57%

Italy, 51% India, 45% April 2 020

* December 2020 demand data used due to unavailable January data

India, 98% Russia, 98% Brazil, 95% Indonesia, 94% China*, 94% Australia, 90% Thailand, 89% Saudi Arabia, 89% USA, 88% Japan, 88% Indonesia, 88% Poland, 88% Turkey, 87% France, 85% Spain, 83% Canada, 77% Mexico*, 73% UK, 71% Italy, 69%

Germany, 60%

January 2021

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Mobility Index implies further improvement in transportation fuels demand

Google's Community Mobility Reports are based on data from users who have enabled location history on a Google Map app. The index compares the daily number of users at different commercial locations to January 2020 baseline data. It is not a comprehensive reflection of all gasoline and diesel demand but captures the trend of a subset. Notably, the report also lacks data for China, the world's second largest oil consuming country. However, for many countries where data exist, the index has correlated very strongly with JODI gasoline and diesel demand (see charts below).

France: Google Mobility Index & Gasoline and Diesel Demand

0%

1200

-1 0%

11 00

-20%

1000

-30% 900

-40%

-50%

800

-60%

700

-7 0%

600

Change in mobility vs. Jan 2020 Jan- 20 Feb-20 Mar-20 Apr- 20 May-20 Jun- 20 Jul- 20 Aug-20 Sep- 20 Oct- 20 Nov-20 Dec-20 Jan- 21 Feb-21 Mar-21

Demand in kb/d

Change in mobility vs. Jan 2020 Jan- 20 Feb-20 Mar-20 Apr- 20 May-20 Jun- 20 Jul- 20 Aug-20 Sep- 20 Oct- 20 Nov-20 Dec-20 Jan- 21 Feb-21 Mar-21

Demand in kb/d

Google Mobility Index Source: IEF, JODI Oil Database, Google Community Mobility Report

Gasoline+Diesel Demand (right)

India: Google Mobility Index & Gasoline and Diesel Demand

10% 0% -1 0% -20% -30% -40% -50% -60% -7 0%

3000 2750 2500 2250 2000 17 50 1500 1250 1000

Google Mobility Index Source: IEF, JODI Oil Database, Google Community Mobility Report

Gasoline+Diesel Demand (right)

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