The International Energy Agency (IEA) on Wednesday forecast a 29 million barrel per day (bpd) dive in April oil demand to levels not seen in 25 years and warned no output cut by producers could fully offset the near-term falls facing the market.
Benchmark Brent crude futures fell following the IEA’s monthly report, by $1.88, or 6.4%, to $27.72 a barrel by 1816 hours IST.
The IEA forecast a 9.3 million bpd drop in demand for 2020 despite what it called a “solid start” by producers following a record deal to curb supply in response to the coronavirus pandemic.
“There is no feasible agreement that could cut supply by enough to offset such near-term demand losses. However, the past week’s achievements are a solid start,” the IEA said.
The Organization of the Petroleum Exporting Countries and other producers including Russia on Sunday agreed to a record cut in output from May of 9.7 million bpd, or almost 10% of global supply, to help support prices.
Aramco eases options
Separately, Saudi Aramco has offered refineries in Asia and Europe the option to defer payments for crude cargo deliveries by up to 90 days, as plants struggle with shrinking demand, refining industry sources said.
The credit terms, offered through unnamed Saudi banks, are also seen as part of the country’s efforts to raise market share, the sources said. Under the terms, Aramco will receive payment for cargoes from the same bank within 21 days of shipment, a source said.