March 9 (Reuters) - Standard Chartered on Monday cut its 2020 and 2021 oil price forecast, saying the price war sparked by the collapse of a deal between the Organization of the Petroleum Exporting Countries and other producers (OPEC+) will likely be severe and prolonged.
The bank slashed its average 2020 Brent forecast to $35 per barrel from $64, and its average 2021 Brent forecast to $44 per barrel from $67 earlier.
For WTI prices, Standard Chartered lowered its 2020 outlook to $32 per barrel from $59, and its 2021 forecast to $41 per barrel from $63.
Oil prices plunged by a third on Monday, the most since the 1991 Gulf War, after Saudi Arabia started a price war with Russia by slashing selling prices, and indicated it would raise output in an already over-supplied virus-hit market.
A three-year pact between OPEC and Russia fell apart on Friday after Moscow refused to support deeper oil cuts.
With that failure, oil supplies are expected to increase sharply, the bank added, noting that the market is not expected to balance until mid-2021 if the price war continues.
Standard Chartered analysts expect Saudi Arabia to increase its crude oil output to close to 11 million barrels per day (mbpd) in April, and then to increase it further to 11.8 mbpd by the end of Q2 2020.
"With supply ramping up at the same time as coronavirus-related demand losses reach their maximum, the short-term floor to oil prices is extremely weak," Standard Chartered said.
Goldman Sachs has cut its second- and third-quarter Brent price forecasts to $30 per barrel, and Morgan Stanley has lowered its demand growth forecast.
(Reporting by Harshith Aranya in Bengaluru; editing by David Evans)