The Kingdom of Saudi Arabia has urged the Organisation of the Petroleum Exporting Countries+ (Opec+) to cut more than 1 million barrels per day as growth in oil demand is affected by the coronavirus epidemic. The Saudi push to slash production due to the coronavirus epidemic involves an oil production cut of nearly 1.5 million barrels a day.
Saudi Arabia is concerned that the coronavirus epidemic could lead to a decrease in oil consumption, media reports said. The Opec+ oil cut discussion is taking place in Vienna this week. In fact, Saudi Arabia has pushed for a larger oil cut compared to the suggestion made by the Goldman Sachs’ technical committee.
It is reported that the panel has recommended 600,000 to 1 million barrels per day reduction in the second quarter of the year. Goldman Sachs was the first Wall Street Bank to predict a shrink in oil demand this year.
The Opec+ was formed four years ago. Jim Burkhard, vice president and head of oil markets at IHS Markit, said, “This is a sudden, instant demand shock. The scale of the decline is unprecedented.”
More recently, Morgan Stanley updated its oil demand forecast in China for 2020. According to the forecast, it expects a near-zero demand on the mainland.
The Environmental Impact Assessment (EIA) was also skeptical of revising its oil demand outlook by 378,000 bpd. EIA said that the growth in oil demand could drop by 190,000 bpd because of the epidemic.
The EIA, Morgan Stanley and IEA have revised their forecast for growth in oil demand, with IEA’s outlook being the most pessimistic.