March 24, 2020 / 1:22 AM / in 10 days

Australia's Viva Energy sees up to 90% plunge in jet fuel demand on travel curbs

March 24 (Reuters) - Fuel supplier Viva Energy Ltd said on Tuesday it expects jet fuel demand to plunge by up to 90% as airlines ground flights due to travel restrictions imposed to arrest the coronavirus’ spread.

The warning comes a day after peer Caltex Australia forecast a similar decline in jet fuel demand as widening travel curbs prompted more flight cancellations.

In Australia, both Qantas Airways and Virgin Australia have grounded their international flights, and substantially reduced domestic capacity.

Viva Energy said it anticipates “aviation volumes to be impacted by approximately 80% – 90% while these restrictions are in place.”

Refining intake by the company in February fell nearly 8% to 3.5 million barrels from the start of the year, while refining margin fell by nearly a third to $2.4 a barrel.

“Regional refining margins may continue to be impacted by lower global demand for oil products in the near term, but this will depend on the extent of refining run cuts and other regional capacity reductions that result,” Viva Energy said.

Crude oil prices have crashed this month as a price war between top producers Saudi Arabia and Russia threatened to unleash excess supply in a market already reeling from lower demand due to the virus outbreak.

The Australian energy firm, however, said its margins could be supported by a weaker Australian dollar, which has lost nearly 9% so far in March.

“We are closely monitoring the situation and will continue to optimise refining operations by adjusting our crude oil slate and production profile in response to market changes,” Viva Energy said.

The company also said it was reviewing capital spending plans and operating costs. (Reporting by Anushka Trivedi and Nikhil Kurian Nainan in Bengaluru; Editing by Aditya Soni)

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