OPEC is forecasting further pain and weak crude oil demand as the coronavirus pandemic continues. Global oil demand is slated to drop by 6.8 million barrels per day this year, it said in its latest monthly report.
The group also said that demand for crude oil would drop to 20 million barrels per day in April, about one-fifth of previous demand. It’s the least amount of crude oil the group has pumped since 1989.
“The oil market is currently undergoing historic shock that is abrupt, extreme and at global scale,” OPEC wrote in the report.
Oil prices whipsawed on OPEC’s report, and remain near 18-year lows, overlooking a historic production cut between OPEC and its allies. Over the weekend, the group said it would begin cutting production by 9.7 million barrels per day starting May 1.
The agreement came after Saudi Arabia and Russia previously disagreed on production cuts, sparking a price war that weighed heavily on oil prices and threatened to push supply to record levels as demand fell sharply.
The International Energy Agency has also forecast that oil demand will plummet as the coronavirus pandemic continues. In a Wednesday report, the agency estimated that in April, global demand will fall by 29 million barrels per day.
There is likely more pain to come, according to OPEC’s report. The group expects the world economy to face a “severe” recession in 2020.
“The virus containment measures that were mandated and/or implemented by various governments have included far-reaching lockdowns, travel restrictions and social distancing exigencies, which currently affect over 40percent of the world’s population,” OPEC wrote.
The report continued: “So far, these restrictions have led to tumbling fuel consumption, amid product inventory builds, severely damaging jet fuel markets and driving gasoline margins into negative territory.”