The world’s crude oil storage capacity may fill up next month because of coronavirus-related weak demand and rising oversupply, OPEC Secretary-General said Thursday.
With widespread travel restrictions, business and industry shutdowns, "supply and demand fundamentals are horrifying," Mohammad Barkindo said during his opening speech at an OPEC and non-OPEC ministerial meeting via webinar.
When OPEC and its allies last met March 6 in Vienna, global GDP growth for 2020 was estimated at 2.4%, but currently forecast to contract 1.1%, Barkindo said.
Oil demand estimates for 2020 also took a hit, from a growth of around 0.1 million barrels per day (bpd) to a contraction of 6.8 million, he said.
"Given the current unprecedented supply and demand imbalance there could be a colossal excess volume of 14.7 million bpd in the second quarter," Barkindo said.
"This oversupply would add a further 1.3 billion barrels to global crude oil stocks, and hence exhaust the available global crude oil storage capacity within the month of May.”
Barkindo noted more than $1 trillion investment was lost during the oil market imbalance between 2014-2016 when producers lost trillions of dollars in revenues.
The secretary-general urged OPEC and non-OPEC oil-producing countries to "urgently address" the market imbalance and stand "shoulder-to-shoulder" to help the global oil industry to survive.
Saudi Arabia-led OPEC and Russia-led non-OPEC failed March 6 in Vienna to reach a production cut deal to support prices against the negative impact of COVID-19.
With weak oil demand and a rising glut of supply, prices hit its lowest level of March 30 since 2002, hurting oil-producing countries' budgets that are dependent on oil export revenues.
By Ovunc Kutlu