NEW YORK (Reuters) – Oil prices plunged on Wednesday, with U.S. crude futures hitting an 18-year low and Brent a 16-year low as Goldman Sachs said lockdowns to counter the coronavirus pandemic raised prospect of the steepest ever annual fall in oil demand.

With governments worldwide urging residents to limit gatherings and isolate themselves, global oil demand by the end of March could fall as much as 8 to 9 million barrels per day, Goldman Sachs said. The yearly fall could be as much as 1.1 million bpd, which it said would be a record.

“The oil demand collapse from the spreading coronavirus looks increasingly sharp,” Goldman Sachs said, forecasting a fall in Brent prices to as low as $20 in the second quarter.

The oil market was already reeling after Saudi Arabia decided this month to dramatically increase supply since it and Russia could not agree to cut output in anticipation of weaker demand.

Saudi Arabia has so far ignored entreaties to act to balance the market, reiterating plans to maintain production at more than 12 million barrels per day, which would be a record.

“I’ve never seen anything like this. We’ve never simultaneously had demand destruction from one event at the same time that supply is being increased and flooding the market,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

Brent crude LCOc1 was trading down $2.68, or 9.3%, at $26.05 a barrel after dropping as low as $26.65, weakest since late 2003.

U.S. crude CLc1 was down $4, or 15%, at $22.95 a barrel by 11:08 EDT (15:08 GMT). The session low was the lowest since March 2002.

The last time oil traded at these levels, China had just begun its rise as a global economic superpower, which later propelled world oil consumption to record highs.

Both contracts were on track for a quarterly decline of about 60%, sharpest since at least the 1980s, Goldman Sachs said in a report Wednesday.

U.S. crude fell even after weekly U.S. data showed notable declines in gasoline and diesel inventories. Crude stocks rose by 2 million barrels, while gasoline and distillate inventories fell by 6.2 million and 2.9 million barrels, respectively.

Other investment banks and consultancies have also been slashing demand forecasts.

Rystad Energy projects a year-on-year decline in demand of 2.8 million bpd, or 2.8%, this year.

“To put the number into context, last week we projected a decrease of just 600,000 barrels,” Rystad said.

In addition to imposing social restrictions not seen since World War Two, the world’s richest nations prepared to unleash trillions of dollars of spending to reduce the fallout from the coronavirus.

The impact on demand is starting to show in official statistics, with Japan’s trade bureau saying crude imports into the world’s third-biggest economy in February were down 9% from a year earlier.

Virgin Australia became the latest airline to shut its international network with the suspension of all overseas flights, while Australian Prime Minister Scott Morrison warned that the situation could last six months or more.

Iraq’s oil minister pleaded for an emergency meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers to discuss immediate action to support the market.

A price war between OPEC leader Saudi Arabia and Russia has increased pressure on the market.

The Kremlin said that Russia would like to see the oil price higher. Saudi Arabia’s energy ministry, however, said it had directed national oil company Aramco to continue to supply crude oil at a record high 12.3 million bpd over the coming months.

“With the Saudis and Russians in a fierce battle for market share, it is difficult to see any quick resolution on this front,” ING said of Iraq’s request.

“That said, the only thing that will likely bring them back to the discussion table is even lower prices.”

Additional reporting by Aaron Sheldrick in Tokyo and Ahmad Ghaddar in London; Editing by Elaine Hardcastle, David Goodman and David Gregorio

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