Oil Price Drops To $27 Amid Demand Collapse
The international oil benchmark, Brent crude, slumped to $27 per barrel as traders were concerned that plans for the biggest production cuts in history would fail to offset the deepest fall in demand in 25 years.
The US oil prices tumbled to 18-year lows of $19.20 a barrel on Wednesday morning and Brent crude dropped by five per cent to $27 a barrel.
Brent, against which Nigeria’s oil is priced, fell by $2.09 to $27.51 per barrel as of 5.10pm Nigerian time on Wednesday.
The International Energy Agency warned the market to brace for the lowest oil demand in 25 years because of the global lockdown across 187 countries and territories to contain the virus.
It said oil demand would this month hit its lowest levels for the year, falling to 29 million barrels per day below last year’s average to levels not seen since 1995.
“Even assuming that travel restrictions are eased in the second half of the year, we expect that global oil demand in 2020 will fall by 9.3 million barrels a day versus 2019, erasing almost a decade of growth,” the IEA said.
The fresh price falls come days after the world’s largest oil producers within the Organisation of Petroleum Exporting Countries agreed with its allies to cut up to 9.7 million bpd from their production in May and June.
The IEA warned that there is “no feasible agreement that could cut supply by enough to offset” the impact of the virus on global oil demand but added that the plan was a “solid start”.