Brent Crude Price Crashing in International Oil Market

Oil could crash to  $10 as world runs out of storage

* No crude oil buyers; refiners, exporters, producers in trouble ─Stakeholders

Web Editor | ConsumerConnect
As the immediate biting implications of the dreadful Coronavirus continue to manifest and distort several economies across the world the growing supply glut in oil markets could end up filling all storage tanks worldwide, potentially causing prices to drop even further.
Reuters reports that global oil storage could overflow in the coming weeks as the Coronavirus pandemic has dealt a severe blow on demand, as Saudi Arabia has promised to supply 12.3 million barrel per day (bpd), not just in April 2020 but also over the next few months.
Citing market analysts, it was learnt that such a development would overwhelm the already troubled oil industry, forcing production shutdowns in the process.
Storage facilities—both on land and offshore—are already filling up, the news agency noted, and Saudi Arabia has not yet started to increase its deliveries of crude.
If such a scenario unfolds, some analysts believe oil prices could slide as low as $10 per barrel soon.
“We believe we have not seen the worst of the price rout yet, as the market will soon come to realise that it may be facing one of the largest supply surpluses in modern oil market history in April,” Reuters quoted Bjornar Tonhaugen, Rystad Energy’s Head of Oil Markets.
Recall that Saudi Arabia Wednesday, March 18 said it would maintain oil supply at 12.3 million bpd over the next few months, with exports to rise to a record 10 million bpd from next month.
At the moment, the glut is reportedly compelling traders to offer their cargos at steep discounts in a desperate effort to find buyers.
This raises some questions about Saudi Arabia’s ability to sell the excess crude it plans to be producing over the coming months.
“There are no buyers,” an oil trader from the United States stated.
“Refiners in trouble, exporters in trouble, producers in trouble. This is a disaster with no end in sight.”
“Cargoes are being severely discounted to move as there are little prospects to export and also very few options to store on ship and/or tanks,” another industry source stated.
Brent crude, as of Thursday, March 19, was trading at less than $28 a barrel, with West Texas Intermediate at $22.78 a barrel.

Kindly Share This Story