Covid 19: How coming out of lockdown could impact the energy markets

In this article we look at various trends that are being accelerated by Covid 19 (as identified by Bank of America Global Research) and we then assess what impact they are likely to have on the energy markets:

Geopolitics & globalization


  1. Global to local. Rising anti-globalization sentiment as Covid accelerates the decline of US and European manufacturing.
  2. Supply chain diversification. A shift away from an over-reliance on Chinese manufacturing to improve security of supply.
  3. Climate change cooperation. Increased focus on need for global scientific and political effort to combat climate change.

Impact on the energy markets:

  • Peak globalisation and the diverging responses of the US and China to Covid 19 means rising geopolitical tensions between the US and China, and the West vs. the East. This is likely to see the implementation of tariffs and breakdown of trade agreements.
  • Changing from a global to local supply trend will reshape consumer habits. Oil demand for global shipping will decrease as carbon-intensive consumer behaviours (i.e. fast fashion) are on the decline.
  • While international relations may be strained, Covid has encouraged a global scientific cooperation, and will be applied towards combatting climate change. The combination of these two factors will see the influence of OPEC decline, which could see member stated battling for market dominance – pushing supply up while global demand remains low.

Predicted impact on price:  Low global demand will limit gains sparked by supply concerns arising from geopolitical tensions.

Tech competition


  1. Digital transformation. Acceleration in adoption and deployment of technology to enable remote working.
  2. Long-term enablers. A race for big data, AI, 5G, EVs and improved cyber security a legacy of digital transformation.
  3. Lockdown tech. Working from home, eCommerce, and stay-at-home activities (streaming).

Impact on the energy markets:

  • The digital transformation reduces the need for air travel (most notably business travel). With jet fuel corresponding to 8% of daily oil consumption (pre Covid-19), oil demand will take a lasting hit.
  • Likewise, passenger vehicles made up around a quarter of global oil demand pre Covid-19. With the long-term enablers of remote working and a push toward green-tech and EV’s, this will further stunt oil demand.
  • Shift from industrial power consumption patterns to domestic. With the adoption of remote working, a shift in peak power demand (typically peak hours will shift 1-2 hours later in the mornings) and a reduction in this peak. With lower consumption, green generation will be contributing to a larger proportion of the energy mix.

Predicted impact on price: ▼ The cost of “going green” is mitigated by drops in power consumption and low oil demand.

Big Governments


  1. Safety over privacy. The role of tech for implementing governmental power leads to debates about the right to privacy
  2. Stakeholders over shareholders. Erosion of shareholder supremacy as governments exert greater influences on businesses
  3. Personal safety boom. Government spending on personal safety will remain elevated compared to pre-Covid levels.

Impact on the energy markets:

  • “Splinternet” with diverging governmental approaches to safety and privacy in a digital world will enhance de-globalisation and international tensions over cyber-security.
  • As more companies rely on governmental support for survival, the danger of major companies going out of business could have a major impact on gas and power demand.

Predicted impact on price:  ▬ Gas and power demand threatened.



  1. Socially focused ESG. Covid-19 has amplified the importance of global public health issues.
  2. Healthtech. A more efficient health system focusing on value-based outcomes through use of technology and big data.
  3. Healthcare as a national resource. Intensified debate around national healthcare coverage.

Impact on the energy markets:

  • Socially focused ESG means governmental spending will be re-distributed away from environmental focus and towards public health. Less governmental support and funding will see new challenges for decarbonizing the UK energy system.
  • With renewables the “expensive options” and the response of the gas market to low oil prices, the role of gas burning for power consumption becomes more profitable may increase in significance in the energy mix.

Predicted impact on price: ▼ Gas burning for power generation become more profitable.

The new consumers


  1. Gen Z leading the way. Consumer habits mean Gen Z are uniquely prepared for an era of remote interactions.
  2. Millennial downgrade. Quickly adapt to new consumer habits but most exposed to long-term reductions in earning potential.
  3. Inequality and unemployment. A 20% fall in income could push 0.5 billion into poverty.

Impact on the energy markets:

  • Shift away from carbon-intensive behaviours, with more climate-aware Gen Z setting consumer trends.
  • As unemployment rises, the shrink in global GDP will put pressure on the markets while the economy is on its path to recovery.

Predicted impact on price: ▲ The long-term cost to decarbonize outweighs pressure on global GDP.

Get in touch

Now that you’ve read about us, we’d love to hear from you. Either contact us, book a free consultation, or fill out this form:

Our Clients

We work with companies head-quartered in US, UK and Europe. And we’re able to service their global needs.