The prices of actual barrels of multiple crude streams in Europe, Asia and Africa have plunged to as little as $5 a barrel, dragging down the entire physical oil market and increasingly distressing major producers. The Dated Brent benchmark, a global reference for nearly two-thirds of the world’s physical flows, plunged to $13.24 a barrel on Tuesday, the lowest since 1999, according to price reporting agency S&P Global Platts. As Dated Brent is used for determining the price of many other physical grades, that means that key European and African crude streams will now sell under $10 or even $5 a barrel, since many are at hefty discounts to the benchmark, traders said. Grades in Asia are at rock bottom too. That’s in contrast with a fiscal breakeven of about $133 a barrel for crude in Nigeria, or Iraq which needs about $60 a barrel.
Stockpiles the world over are expanding rapidly because of the demand hit caused by Covid-19, and space to store the glut is running out. “Right now it’s bad,” says Johannes Benigni, founder of consultant JBC Energy GmbH. “What we see right now is obviously a meltdown in the market. The market is running into tank tops. ”
Among the grades hardest hit are those most exposed to buying in what’s known as the spot market — for immediate supply. That’s particularly the case in West Africa, where one of Nigeria’s main streams, Bonny Light crude would be pricing a little over $8 a barrel if Dated Brent stays where it is.