Global Oil Market Facing ‘Historic Demand Drop’- OPEC


The Oil Producing and Exporting Countries (OPEC), in its latest monthly report has stated that the oil world market for crude is undergoing an unprecedented jolt due to coronavirus mitigation measures that have decimated demand.

“The oil market is currently undergoing a historic shock that is abrupt, extreme and at global scale,” the group of producer nations OPEC aid in its latest monthly report.

The cartel now forecasts a “historical drop” of around 6.8 million barrels per day (mbd) in average daily demand for 2020. It sees worse contraction of about 20 mbd in April.

If compared with the forecasts by International Energy Agency (IEA), a Paris-based organisation that advises major energy consuming nations, this OPEC forecasts look less severe. IEA has forecast drop in demand in April to be around 29 mbd, and 9.3 mbd overall in 2020.

Last week, OPEC and its allies (OPEC+) struck a deal at the weekend to scale back output by around 10 mbd, but this had no effect on the oil prices which have not rallied as traders see it as insufficient given the magnitude of the drop in demand. This demand contraction will fall to its lowest in three decades according to OPEC.