Brent crude oil is at its lowest level in 17 years, as the international benchmark slipped below $25 per barrel Wednesday, bringing its year-to-date losses to 58%, as governments worldwide accelerated lockdowns to counter the Coronavirus pandemic that is causing global fuel demand to collapse.
Medhat Youssef, a former vice-president of the Egyptian General Petroleum Corporation (EGPC) told Daily News Egypt that the increase in Saudi oil exports led to an oversupply of crude in global markets.
“Combined with the drop in demand on the back of the coronavirus pandemic, Brent will drop to about $20 a barrel, which will lead to major losses in oil-exporting countries,” Youssef added.
Youssef explained that the coronavirus led to a slowdown in industrial and commercial activities in the global markets and reduction in consumption rates of oil.
Amin Al-Nasser, CEO of Saudi Aramco, confirmed, in an official statement, that the company received a mandate from the Ministry of Energy to increase its oil production capacity to 13 million barrels per day from 12 million barrels per day at present, an increase of one million barrels per day.
Abdulaziz bin Salman, the Saudi Energy Minister, said he saw no need to hold a meeting of OPEC + in the period from May to June, in the absence of agreement on the measures that must be taken to deal with the impact of the coronavirus on demand and prices.
He noted that every oil producer should maintain its market share after Russian Energy Minister Alexander Novak was quoted as saying earlier that the price cuts offered by Saudi Aramco had caused a market panic.
The former deputy head of the EGPC stressed that the efforts of OPEC to reduce the supply of oil in the markets and persuade Russia and Saudi Arabia to reduce production were unsuccessful, and the disintegration of the agreement between the members of the organisation and their allies on reducing production.
Goldman Sachs cut its forecast for the price of Brent in the second quarter by a third to $20 a barrel, expecting a record decline in global demand by 1.1 million barrels per day this year due to the implications of the Coronavirus outbreak on economic growth.