Pump jacks draw crude oil from the Long Beach Oil Field near homes in Signal Hill, Calif., on March 9, 2020.DAVID MCNEW/AFP/Getty Images
OPEC on Wednesday slashed its forecast for global growth in oil demand this year due to the coronavirus outbreak and said further cuts may follow, underlining the outbreak’s deepening impact on the market days after a pact on output cuts collapsed.
The Organization of the Petroleum Exporting Countries expects global demand to rise by just 60,000 barrels per day (bpd) in 2020, a reduction of 920,000 bpd from its previous forecast, it said in a monthly report.
“Considering the latest developments, downward risks currently outweigh any positive indicators and suggest further likely downward revisions in oil demand growth should the current status persist,” OPEC said.
The report’s release follows the March 6 collapse of a output-cutting pact between OPEC and non-member producers led by Russia.
The prospect of burgeoning oversupply has sent oil down by 28 per cent to $36 a barrel since March 5, losing OPEC members up to $500 million a day.
OPEC, Russia and other producers, a group known as OPEC+, had since Jan. 1 implemented a deal to cut output by 1.7 million bpd to support the market.
Three years of cooperation by OPEC+ producers ended in acrimony on Friday after Moscow refused to support deeper oil cuts to cope with the coronavirus outbreak. OPEC responded by removing all limits on its own production.
In February, OPEC over-delivered on its cuts, lowering supply by 546,000 bpd to 27.77 million bpd, according to secondary sources cited in the OPEC report, due to involuntary losses in Libya and deliberate cuts led by Saudi Arabia.
That figure is set to rise sharply this month following the OPEC+ deal collapse.