The ravaging Covid-1 coronavirus is set to crash international crude oil prices to as low as US$10 per barrel, experts have estimated.
The massive decline in prices is also because the world may soon run out of space to store its extra oil as Saudi Arabia prepares to increase its fossil fuel production even as global demand for energy continues to fall due to the Covid-19 pandemic.
Oil storage levels across the world’s storage facilities have climbed to about three-quarters full on average since the January shutdown of major refineries in China’s industrial heartlands to stem the outbreak of the coronavirus.
Countries like Ghana which depends heavily on crude oil imports may be forced to drop ex-pump prices further due to the world market situation. However, Ghana which also exports crude oil may want to balance its own shortfalls from the price collapse of crude oil because revenues will essentially dry up from its crude resources.
According to international media outlets, Canada may already be days away from running out of storage for its domestic oil production, according to analysts at energy consultancy Rystad Energy, and the rest of the world may follow suit in a few months.
“Compounding the situation is the near-certainty of a steep reduction in crude-by-rail exports this year,” said Thomas Liles, an analyst at Rystad, “As well as deferral of spring maintenance at several key oil sands mining projects.”
According to experts, the global oil industry may increasingly look to offshore oil tankers to store their extra crude oil, but for this to be economic it would require oil prices to fall further.
The global oil price fell to lows of $25 a barrel a last week, from more than $65 at the start of the year, and remains below $30 a barrel. Rystad has warned the industry that the oil price may fall to $10 a barrel this year.
The world’s oversupply of oil is expected to balloon next month when an agreement between the Opec oil cartel and Russia to hold back oil production is due to end.
The oil price war is expected to raise the world’s oil production by more than 2.5m barrels of oil a day, which would outpace demand for crude by 6m barrels of oil a day.