As the coronavirus outbreak freezes the global economy, OPEC expects demand for its crude will fall to the lowest in three decades. According to OPEC monthly report, just under 20 million bpd will be needed on average in Q2 from the group. Since decades, this is the lowest crude pumped by OPEC.
As governments extend lockdowns to contain the pandemic, massive production cuts amounting to 10 percent of global supplies agreed by OPEC and its allies over the weekend. Why they’ll need to deliver the pledged reductions in full illustrated by the report released from the cartel’s secretariat in Vienna on Thursday.
OPEC members would still be producing more than the market requires in Q2, even if they fully implement their share of the agreed cutbacks.
About 23.4 million bpd or roughly 3.7 million more than the “call on OPEC” would be pumped by the 13 nations of OPEC members with perfect compliance. For the organization, things could be even tougher than it’s forecasting.
While forecasts for global oil demand this year slashed by OPEC, its estimates are still considerably more optimistic compared to the IEA’s outlook. A slump of just over 9 million bpd projected by IEA on Wednesday. Meanwhile, the group sees world oil demand contracting by 6.8 million bpd in 2020.
