The Secretary General of the Organisation of Petroleum Exporting Countries (OPEC) Mohammed  Barkindo  has said that the global oil market would record excess crude oil supply of  14.7 Million Barrel per Day (MBD) in the second quarter.

This signals a sustained low price and even further drop in the price of crude worsening the financial fortunes of Nigeria and other countries heavily dependent on crude oil sales.

Barkindo disclosed this at the 9th OPEC and non-OPEC Ministerial Webinar meeting on Thursday.

“The OPEC Secretariat’s assessment of available global oil storage capacity stands over one billion barrels. Given the current unprecedented supply and demand imbalance there could be a colossal excess volume of 14.7 mbd in the 2Q20.

“This oversupply would add a further 1.3 billion barrels to global crude oil stocks, and hence exhaust the available global crude oil storage capacity within the month of May.

“There is a grizzly shadow hanging over all of us. We do not want this shadow to envelope us. It will have a crushing and long-term impact on the entire industry,’’ he said

Barkindo described COVID-19 as an unseen beast that seemed to be impacting everything in its path.

He noted that in the first week of March the industry outlook looked relatively bleak, but  added that in just over one month it had changed beyond all recognition.

“The supply and demand fundamentals are horrifying; the expected excess supply volumes on the market, particularly in the Q2 of 20, are beyond anything we have seen before.

“Our industry is hemorrhaging; no-one has been able to stem the bleeding. We are already seeing some

productions shut-ins, companies filing for bankruptcy and tens of thousands of jobs are being lost.

“The data and analysis presented and deliberated on today, underscores the scale of the massive challenge before us,’’ he added.

Barikindo said that as at OPEC meeting in March the expected 2020 global GDP growth was 2.4 per cent, but it is a negative 1.1 per cent, presently.

He noted that it was incredible to think that the global contraction was far greater than that for the Great Recession of 2008 to 2009.

“In early March, expected 2020 global oil demand  growth was just below 0.1 mb/d. Today, we are looking at a contraction of 6.8 mb/d, with the second quarter alone close to 12 mb/d and expanding. These are staggering numbers, unprecedented in modern times.

“The outlook for non-OPEC supply growth in  2020 has also fallen by over 1.5 mb/d, although this is nowhere near the drop for oil demand,’’ Barkindo said

He said that all the producers of OPEC, OPEC+ and other producing nations that had taken it upon them to responsibly join the meeting today, need to recall the severe market imbalance of 2014-2016.

Barkindo noted that it was when oil producers lost trillions of dollars in foregone revenues, and globally more than 1 trillion dollars was lost in terms of investment.

“It is imperative we take urgent action. It is in all of our interests, and it is also in the interests of consumers.

“That is not to say that any medicine will be  easy; obviously, it won’t. But it is clear that it is needed. And it will benefit us all.

“These difficult times require unparalleled  flexibility and commitment. Commitment and shared responsibility is part and parcel of the history of the DoC partners.

“We have always been proactive and proportional; responsible and responsive; thorough and thoughtful,’’ he said .

He further called on oil producers at the  to look at the market outlook  and stand shoulder-to shoulder to help this vital global industry survive.

Barkindo noted that second quarter, around 20 per cent of global oil consumption had evaporated and the huge market imbalance needed  to be urgently addressed.

“With the huge challenge before us, and in this increasingly complex and interdependent world, we count on the spirit of togetherness and the enduring timelessness of the principles of international cooperation driven by inclusiveness and mutual respect among all nations to guide us through this demanding period,’’ he added. (NAN)