This year’s second quarter will see the largest volume of liquids production cuts, including shut-in production, in the history of the oil industry, according IHS Markit analysis.
As much as 17 million b/d total liquids output (including nearly 14 million b/d of crude oil production) is now expected by IHS Markit to be cut or shut-in between April and June 2020.
“The Great Shut-in, a rapid and brutal adjustment of global oil supply to a lower level of demand is underway. All producing countries are subject to the same brutal market forces. Some will be impacted more than others. But there is nowhere to hide,” says Jim Burkhard, vice-president and head of oil markets, IHS Markit.
Oil demand in the second quarter of 2020 is expected to be 22 million b/d less than a year ago.
This collapse in demand combined with low oil prices, storage constraints, and government ordered cuts are driving what is an extraordinary level of liquids production cuts and shut-ins around the world.
North America and OPEC members, as well as countries in the Commonwealth of Independent States—particularly Russia—are expected to be the source of most of the cuts.