The International Energy Agency (IEA) has forecast a 29 million barrel per day (bpd) dive in April oil demand to levels not seen in 25 years and warned no output cut by producers could fully offset the near-term falls facing the market.
The IEA forecast on Wednesday a 9.3 million bpd drop in demand for 2020 despite what it called a “solid start” by producers following a record deal to curb supply in response to the coronavirus pandemic.
“By lowering the peak of the supply overhang and flattening the curve of the build-up in stocks, they help a complex system absorb the worst of this crisis,” the Paris-based IEA said in its monthly report.
“There is no feasible agreement that could cut supply by enough to offset such near-term demand losses. However, the past week’s achievements are a solid start.”
Oil prices slumped in early European trading. Benchmark Brent crude was down 3.45 percent at $28.58 per barrel at 09:30 GMT, while US crude was 2.14 percent lower at $19.65.
In addition to supply cuts by Saudi Arabia, additional members of the Organization of the Petroleum Exporting Countries (OPEC) and others including Russia, some nations are expected to boost buying for strategic reserves.
The IEA said it was “still waiting for more details on some planned production cuts and proposals to use strategic storage”, noting the United States, India, China and South Korea have either offered or are considering such purchases.
“If the transfers into strategic stocks, which might be as much as 200 million barrels, were to take place in the next three months or so, they could represent about 2 million bpd of supply withdrawn from the market,” the IEA said.