US crude oil production, estimated at record highs above 13 million barrels per day (bpd) just last week, could fall 2 to 4 million bpd over the next 18 months due to the economic crunch caused by the novel coronavirus (COVID-19) pandemic and overproduction by Saudi Arabia, the consulting firm IHS Markit said in a note on Monday
NEW YORK (Pakistan Point News / Sputnik - 16th March, 2020) US crude oil production, estimated at record highs above 13 million barrels per day (bpd) just last week, could fall 2 to 4 million bpd over the next 18 months due to the economic crunch caused by the novel coronavirus (COVID-19) pandemic and overproduction by Saudi Arabia, the consulting firm IHS Markit said in a note on Monday.
"The largest 2020-21 impact on production volumes will be in the United States due to the fast reactivity of US oil producers and the high decline rates of tight oil wells," the note said. "US crude oil production could fall by 2-4 million bpd over next 18 months."
On Friday, the US Energy Information Administration said US crude production hovered at record highs of 13.1 million bpd.
IHS Markit said the current situation in the oil market points to the possible buildup of the most extreme global crude supply surplus ever recorded.
If the price war continues in the midst of a global recession and coronavirus crisis - "the surplus could range 800 million to 1.3 billion barrels in the first six months of 2020," IHS Markit said. "Up until now, the largest six-month global surplus since 2000 was from late 2015 to early 2016, when it was a cumulative 360 million barrels."
Oil prices fell as much as 10 percent by Monday afternoon in New York on fears of a looming recession and price war for crude launched by Saudi Arabia after the collapse of the OPEC+ production cut agreement.
"There has been a dizzying drop in world oil demand and a dramatic pivot in Saudi oil production policy," IHS Markit Vice President Jim Burkhard said.
By 12:30 p.m. (16:30 GMT), the London-traded benchmark Brent crude traded at $30.35 per barrel versus Friday's settlement of $33.85. US crude traded at $29.68, against the previous close of $31.73.
