International benchmark Brent was down $ 1.99, or 7.98%, at $ 22.94 a barrel, after falling to $ 22.58, its lowest level since November 2002.
West Texas Intermediate (WTI) crude in the United States was down 96 cents, or 4.46%, at $ 20.55, after falling earlier to $ 19.92.
The price of crude oil is so low now that it is becoming unprofitable for many oil companies to remain activeanalysts said, while producers with higher costs will have no choice but to suspend their work, especially since the storage capacity is almost complete.
Bjornar Tonhaugen of Rystad Energy said that “the oil market supply chains are broken by the incredibly large losses in demand for crude, which will force them to resort to all the adjustment alternatives available in April and May,” as a reduction in refining rates and increased storage.
In addition to the destruction of demand, oil markets have also been hit by the price war between Saudi Arabia and Russia, which is flooding the world with extra supply.
Analysts they estimate that world demand will drop by between 15 million and 20 million barrels per day, a 20% collapse compared to last year, which will require massive production cuts beyond just the Organization of the Petroleum Exporting Countries.
“The OPEC, Saudi Arabia and Russia could settle their differences, but OPEC cannot do much more … The demand impact of COVID-19 is simply too great, “said Lachlan Shaw of the National Australia Bank.