Opec+ technical meeting drags on amid oil cut debate
Markets struggle to assess coronavirus impact on global oil demand
LONDON/DUBAI/MOSCOW: An Opec+ committee extended its meeting into a third day on Wednesday and would debate again on Thursday the need to cut oil output in response to the coronavirus’ impact on energy demand and global economic growth.
Four sources familiar with the talks said the meeting on Wednesday ended with no concrete recommendation and one source said Russia was not supporting a deeper oil output cut and was suggesting an extension of the current pact.
“Russia prefers an extension. They are not supporting (a cut),” the source said.
The Joint Technical Committee advises the Organization of the Petroleum Exporting Countries and its allies led by Russia, a grouping known as OPEC+.
Russia has regularly signalled in past years it was disagreeing with OPEC before ultimately agreeing on policy during formal meetings.
Oil prices have fallen by more than $11 (Dh40.45) a barrel this year to $55, alarming producers. Opec+ is weighing further output cuts, extending the duration of existing curbs and possibly moving up a planned policy meeting to February from March 5-6.
Two other Opec sources said the Opec+ meeting date was unlikely to be brought forward unless there was general agreement on the need to reduce output further.
“If there is only an extension (to current cuts), then we will meet in March as agreed before,” one of the OPEC sources said.
Other Opec+ sources and an industry source familiar with the discussions said on Monday Opec+ members were considering cutting oil output by a further 500,000 barrels per day (bpd) due to the impact on demand from the coronavirus.
Opec+ has been reducing oil supply to support prices, agreeing in December to cut output by 1.7 million bpd until the end of March.
While Opec countries such as Iraq have voiced support for any agreement that would stabilise the market, Russian Energy Minister Alexander Novak said on Tuesday he could not say for sure whether it was time to tighten output curbs.
The economic slowdown resulting from the virus outbreak is expected to reduce 2020 global demand growth by 300,000-500,000 bpd, or roughly 0.5 per cent of global demand, BP Chief Financial Officer Brian Gilvary said on Tuesday.
Oil jumped by more than 3 per cent on Wednesday on media reports that scientists had developed an effective drug against the coronavirus, raising hopes its impact would be limited. The World Health Organisation, however, played down those reports.