The current situation on the oil market with too much supply and collapsing demand is similar to what happened in the middle of the 1980s when a glut led to oil prices staying low for 17 years, John Browne, who was chief executive at BP between 1995 and 2007, told the BBC on Tuesday.

“The prices will be very low and I think they will remain low and very volatile for some considerable time,” Browne told the BBC, as carried by Reuters.

“There is still a lot of oil being produced that is going into storage and not being used,” BP’s ex top executive said.

Browne’s comments came a day after WTI Crude prices of the May futures contract crumbled by more than 300% to settle at -$37 a barrel—crashing into negative territory for the first time ever as traders rushed to get rid of the May contract to avoid actually owning physical oil barrels for delivery in May.

Commenting on the price collapse, BP’s former CEO Browne said:

“This is very reminiscent of a time in the mid-1980s when exactly the same situation happened - too much supply, too little demand and prices of oil stayed low for 17 years.”

Currently, collapsing oil demand with lockdowns in many countries and airlines struggling to survive as no one travels is wreaking havoc on the oil market where the glut continues to grow, despite pledges from OPEC+ to cut 9.7 million bpd production in May and June. Much higher production than current demand is quickly filling storage capacity around the world, and analysts say that tanks and tankers will be brimming by the end of May, at the latest.

Even after this apocalyptic carnage on the oil market, when demand recovers, it could still be weaker than before, also because of climate change awareness, according to ex-BP Browne.

“And that demand will be filled primarily by those who have no choice but to produce oil - so the state oil companies of the world,” he told the BBC.

By Tsvetana Paraskova for Oilprice.com

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