Secretary-General of the Organisation of Petroleum Exporting Country (OPEC), Mohammad Barkindo, yesterday, warned that no economy is immune to the impact of the Novel Coronavirus (COVID-19) on the global crude oil market.
In his address at the Extraordinary G20 Energy Ministers Meeting, Barkindo affirmed that it had become crucial for every stakeholder to take steps towards helping impacted individuals and businesses.
He said, “We are living in unprecedented times. When the year 2020 began no-one could have dreamt up the situation we find ourselves in today. The COVID-19 pandemic has pervaded almost every aspect of our daily lives.
“It is a major disruptor in terms of the tragic loss of life; it has forced governments into widespread lockdowns; economies are in distress; schools have closed; and we are holding meetings like this one via teleconference. Every economic sector has been impacted by this silent beast. This is clearly evident in global oil.
“Every producer, many of whom are developing nations, has been impacted; no-one is immune. It is forcing us to assess and reassess what the consequences are on an almost daily basis. We need to find solutions to help all peoples of the world, the industry and related businesses, as we try and navigate these extraordinary times.
“This was evident in the responsive and responsible decision taken yesterday by OPEC and participating countries in the ‘Declaration of Cooperation’ to adjust crude oil production by 10 mb/d beginning on 1 May 2020, for an initial period of two months; then by 8 mb/d from July to December 2020; and by 6 mb/d for the period of January 2021 to April 2022, in the interests of producers, consumers, and the global economy.”
Barkindo warned that there was a dark cloud currently circling the global energy industry, noting that all efforts should be geared towards ensuring that the industry emerged from the pandemic stronger.
He said, “This is starkly apparent when we look at the harrowing global recession now upon us, and the oil demand destruction we are facing. We see global GDP growth in 2020 at a negative 1.1 per cent, a greater contraction than that for the Great Recession of 2008-2009, and global oil demand growth is forecast to drop by 6.8 million barrels per day (MBD) with the second quarter alone around 12 million barrels per day, and expanding.
“These are jaw-dropping numbers! The jaw drops even further when we look at the supply and demand imbalance in the 2020,If no action is taken. There could be a colossal excess volume of 14.7 mbd, which would add a further 1.3 billion barrels to global crude oil stocks.
This figures suggest that the available global crude oil storage capacity would be exhausted before the end of May.
“There is a ghostly spectre encircling the oil industry; it needs to be addressed urgently. We need to act now, so we can come out of other side of this pandemic with the strength of our industry intact. An industry that has fueled the current civilization.
“We welcome the importance that the G20 attaches to oil market stability. We also appreciate that many G20 members are large consumers of oil. In this regard, we need to appreciate that any shortfall in investments in the coming year could sow the seeds for future energy security issues in the years ahead. It is in all of our interests to support stability in this vital global industry.”