The shutdown of oil wells has already wiped out nearly 1m barrels a day from global production, but the figure is expected to rise as producers run out of space to store their extra oil as the crisis continues.
U.S. West Texas Intermediate (WTI) crude futures hit a low of $19.92 in early trading and last traded down 5.2%, or $1.12, at $20.39 a barrel as of 2332 GMT, while Brent futures fell 5.6%, or $1.40, to $23.53 a barrel.
Oil prices have fallen by more than half during the past month as companies cut back or close production. On Friday, the two countries were still at a stalemate, with Saudi Arabia saying it was not in talks with Russian Federation to stabilize oil markets despite Washington stepping in to pressure both sides to end the price war. WTI was last 4.51% lower at $20.54 per barrel.More news: Italy’s deaths from coronavirus exceed 10,000 despite lockdown
Brent crude oil for May declined $1.45 US, or 5.8%, to $23.48 USA a barrel on the ICE Futures Europe exchange after falling to $23.03 US earlier.
"Oil prices failed to keep pace, with growing (coronavirus) lock-down measures and reports that this could drive global demand down 20%, potentially pushing the world to run out of storage capacity", said Morgan Stanley analyst Devin McDermott, citing a forecast by the Paris-based International Energy Agency.
Some analysts think that the oil price could hit $10/barrel over the coming months, which from my perspective would represent "back up the truck" territory.
Hirs said the current low price environment will hurt all OPEC+ members, as well as other oil producing countries that are not part of the group.More news: ICC postpones World Cup qualifiers
With world demand now forecast to plunge 15 million or 20 million barrels per day, a 20% drop from a year ago, analysts say massive production cuts will be needed beyond just the Organization of the Petroleum Exporting Countries (OPEC).
Prompt prices are lower than those in future months in a contango market, encouraging traders to store oil for future sales.
On Wednesday, US media reported that President Trump planned to try to convince Riyadh to end its oil production boost amid concerns over the price war's impact on US shale, which has a breakeven price of as high as $68 per barrel. This news could also trigger a short-covering rally.More news: New outdoor rules as 16 die from virus