The latest decision by Saudi Arabia to boost crude production amid declining demand in the wake of the coronavirus outbreak could lead to a surplus in oil markets by as much as 6 million bpd in April, according to latest estimates by Goldman Sachs. The bank also forecast that UK Brent oil could average around $30 per barrel in Q2 2020 even as crude inventories continue to rise in the coming months.

The resulting supply glut and falling oil prices could drive some high cost oil producers to wind down oil producing efforts as it could become too expensive for them to manage. The coronavirus pandemic could drive demand lower by as much as 4.5 million bpd, even though China’s oil demand is expected to start improving shortly as the number of cases slow down and it returns towards normalcy.

However, oil demand growth globally could decline by 310k bpd into 2021, with Q1 2021 seeing a dip in shale output by as much as 900k bpd amid higher supply by OPEC leaders. Even the possibility of geopolitical tensions in the Middle East would not offset the effects of oversupply unless very severe in the near future.