The tense situation in the global oil market is forcing experts to revise their forecasts. Currency strategists at Goldman Sachs, the largest investment bank, warn that Brent crude oil price could slip to $20 per barrel.
Goldman Sachs experts believe that the unstable external environment contributes to a further decline in the global oil market. Such a drop in prices dramatically changes the overall picture of the commodity market, causing the bank to lower its oil and gas market outlooks.
Earlier, market participants expected oil prices to rise to $30 per barrel in the second and third quarters of 2020. At the moment, Brent crude oil futures for May settled at $35.23 per barrel on the London-based ICE exchange after tumbling to $31.02 earlier in the session. West Texas Intermediate crude for April 2020 slumped by 27.1% to $32.48 per barrel.
According to analysts, Monday, March 9, marked the biggest one-day percentage decline in oil prices on Asian stock markets since 1991. This time, oil prices dipped by more than 30%.
The main factor contributing to the global oil market crash was the collapse of talks between members of the OPEC+ alliance. Last Friday, on March 6, the Organization of the Petroleum Exporting Countries and its allies failed to extend their agreement to cut oil production.
Russia refused to reduce its oil production by an additional 1.5 million barrels per day in the second quarter of 2020. As a result, Saudi Arabia slashed its crude pricing and announced that it would increase oil output to 10 million barrels per day in April. The standoff between the former parties of the OPEC+ agreement led to undesirable consequences for the global oil market, experts said.
