The first tankers in what looks like a long fleet of tankers are loading now in Saudi Arabia on their way to Europe and the United States in April.
The Saudi government looks to be making good on its announced increase in output to a record 12.3 million barrels a day in April from 9.7 million barrels a day in February. The country also cut the official selling price on its oil earlier the month as another move in the country’s price and production war with Russia. That oil production war, set off when Russia refused to join other oil producers in curbing output, has hit at the same time as the global coronavirus pandemic has cut demand for oil.
The Saudis have already loaded three supertankers with four more loading right now. All were hired in the past few weeks to boost the country’s oil export capacity. In addition Saudi Arabia has increased its exports to Egypt to the highest level in three years to preposition crude for re-export to Europe.
The next development in the oil war comes around April 5 Â when state-owned Saudi Aramco is expected to release its monthly official selling prices for May. The Saudis will need deeper discounts on their crude in order to sell all the oil that is now lined up for sale.
The eventual endpoint of this is that some producers somewhere will shut production. IHS Market expects as much as 10 million barrels a day of world oil production to be cut or shut-in from April through June. However, oil demand is expected to fall even faster with demand in the  second quarter, according to IHS Market, expected to decline by 16.4 million barrels a day year over year.
Today, March 31, oil prices are relatively stable with U.S. benchmark Wes Texas Intermediate up 2.19% to $20.53 a barrel. International benchmark Brent crude is down 0.09% to $22.34 a barrel.
