April will be one of the toughest months in history for oil, according to Rystad Energy.

April will be one of the toughest months in history for oil, according to Rystad Energy’s head of oil markets Bjornar Tonhaugen.

“The market is oversupplied in April to the tune of 25 million barrels per day, as the deepest loss in oil demand on record coincides with a surge in core-OPEC crude exports spearheaded by Saudi Arabia,” Tonhaugen said in a statement sent to Rigzone on Wednesday.

“There’s nowhere to hide from this tsunami of oversupply, and diplomacy won’t be able to help the physical oil market nor oil prices in the short term,” he added.

Tonhaugen noted that Saudi Arabia is “seemingly digging in deeper in the survival of the fittest environment for oil producers” and said Aramco is expected to deepen its discounts on May term allocations when these are announced over the coming weekend.

“Physical crude prices are already in single digits and we would not be surprised to see further prints of negative oil prices in niche crude spot markets as the market is officially broken and no longer reflecting the value of crude, but the largest extent of oversupply we have never witnessed in history,” Tonhaugen stated.

On Tuesday, a research note from Standard Chartered revealed that the company expects excess supply to average 18.3 million barrels per day in the second quarter (2Q) and to peak at 21.8 million barrels per day this month.

“We estimate global oil supply starts April close to 3.2 million barrels per day higher year on year, while we forecast global oil demand will be lower 18.5 million barrels per day year on year in April,” Standard Chartered stated in the note, which was sent to Rigzone.

“The coronavirus is therefore responsible for 85 percent of the expanded oil surplus, and even if the price war were to be called off today, it would not affect the prognosis for the industry in 2Q greatly,” Standard Chartered added.

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