Oil markets are rushing towards an inflection point. Global demand is dropping at unprecedented levels as economies across the world are placed on lockdown in a bid to curb the spread of the Covid-19 pandemic. With the demand shock now augmented by a supply wave after the 1 April expiry of Opec+ cuts (MEES, 6 March), prices are poised to drop even further. Producers in Russia and the US appear vulnerable to the risk of shut-ins.

A number of US producers have been visibly shaken by the risks, with some going so far as to lobby authorities for a production cut agreement, or to place restrictions on imports of Saudi crude. Initially bullish statements from Russian producers have also faded away. US President Trump then tweeted on 2 April that after speaking with the Saudi crown prince, he expected a new Saudi-Russia agreement to cut (MEES, 3 April). (CONTINUED - 1279 WORDS)