Fuel consumption in China has plunged as much as 20 per cent/Bloombergby Bloomberg
The Organisation of Petroleum Exporting Countries and its allies (OPEC+) are gathering for an urgent assessment of how China’s coronavirus may hurt oil demand, and what measures they can take in response.
Under increasing pressure, after crude prices sank below $50 a barrel for the first time in more than a year, technical experts from the OPEC+ coalition will meet in Vienna to evaluate the disease’s impact. Fuel consumption in China—the world’s biggest oil importer—appears to have plunged as much as 20 per cent as cities are quarantined and factories halted.
Saudi Arabia, OPEC’s biggest member, has been pushing for such a gathering but has faced some reluctance from Russia.
OPEC+ started a fresh round of deeper production curbs last month, the latest step in a three-year effort to prevent plentiful US shale supplies putting the global market into surplus. But the outlook has deteriorated rapidly in the last few weeks as the coronavirus curbs air traffic and slows China’s economy.
The next OPEC+ ministerial meeting was already scheduled for early March 2020, but the group is now considering whether to hold that gathering in the next couple of weeks to respond to the crisis. The Joint Technical Committee’s analysis of the market is intended to help address that question.
OPEC’s research department in Vienna has prepared nine scenarios with different estimates of how the coronavirus may affect oil consumption.
The average price of crude sold by OPEC members was about $59 a barrel earlier this week, far below the levels that most of them need to cover government spending.
While Saudi Arabia has urged fellow producers to meet and act, there is so far been a more cautious attitude from its most important partner, Russia. Though not an OPEC member itself, Russia has proved to be an influential voice since the OPEC+ alliance was established three years ago.