Oil is entering a period of unparalleled demand destruction this month that promises to transform the industry for years to come. Daily consumption will plummet by 15 million to 22 million barrels in April from a year earlier, according to estimates from some of the world’s most influential energy analysts. The crash has already led to refiners slashing processing, drillers halting output and storage tanks swelling across the world. “This will likely be a game-changer for the industry,” Goldman Sachs Group Inc. analysts including Jeffrey Currie and Damien Courvalin said in a March 30 note. “It is impossible to shut down that much demand without large and persistent ramifications to supply.”
he demand slump is being exacerbated by former OPEC+ allies Saudi Arabia and Russia pumping as much crude as they can in a battle for market share, heaping additional pressure on shipping, tanks and pipelines. Goldman sees around 20 million barrels a day flowing into storage in April, while IHS Markit expects the world will run out of space to store oil by the middle of the year.
Few in the industry will be spared. April is also set to be the worst ever month for global jet fuel demand, while industry consultant FGE forecasts American gasoline consumption will plunge by 50% from a year earlier. Energy Aspects Ltd. predicts global benchmark Brent crude may drop to near $10 a barrel, a level not seen in more than two decades.