OPEC is said to be considering a proposal to deepen current production curbs by about 500,000 barrels a day/Bloombergby Bloomberg
The Organisation Petroleum Exporting Countries (OPEC) and its allies are considering how to respond to a plunge in oil prices, with Russia signalling for the first time it was open to Saudi Arabia’s push for an emergency meeting.
Potential dates being discussed are 8-9 February and 14-15 February though, for now, the next regular meeting on 5-6 March 2020 remains on the schedule.
Russia has been rebuffing the requests and even said that more time was needed to assess the situation, yet added it was willing to convene and even act if needed. The group is holding a meeting of technical representatives—the Joint Technical Committee—to assess the coronavirus’ effect on markets.
Alexander Novak, Russia’s Energy Minister, said, “In principle, we’re ready to react on such things, but for that, we need to assess the situation more accurately, monitor how it will develop in the coming days.”
China is the oil market’s primary source of demand growth and measures taken to slow the spread of the coronavirus—including a lock-down in one of the country’s major cities and the unprecedented extension of the Lunar New Year holiday—could wipe out a big chunk of that additional consumption.
OPEC is said to be considering a proposal to deepen current production curbs by about 500,000 barrels a day, though there is no consensus on the idea yet. As OPEC and its partners are already in the midst of steep production cutbacks, many analysts are sceptical on how much more they’re willing to do.
The group unveiled a new set of supply curbs just over a month ago, which only came together after considerable diplomatic wrangling. To implement these, Saudi Arabia has already slashed production to the lowest since 2014.
Russia, which has become the most important producer in the coalition alongside the Kingdom, has typically taken some persuading to sign up for additional cuts and has a patchy record of implementing its pledges.
Similarly, Russia requires lower crude prices than Saudi Arabia and most other OPEC countries to cover its spending plans. Still, the alliance with OPEC has served the country’s economic interests, with Russia consistently one of the biggest financial beneficiaries of the deal.
If OPEC+ agree on an early meeting, history suggests it may result in further action to defend prices.