Dubai: Oil slipped below $50 a barrel in London as the fast-spreading coronavirus roiled global markets, intensifying speculation that Opec and its allies will strike a deal to support prices.

Brent crude for May delivery, the most actively traded contract, lost almost 4% as fears over the outbreak sent shares around the world slumping.

The market’s price structure has weakened dramatically, tumbling into a contango, while the profits from making products like diesel have also collapsed. Amid the slump, there are signs that Opec and its allies could be nearing agreement on action to stem the rout before meeting in Vienna next week.

The group’s top official said the cartel and its allies are displaying a “renewed commitment” to reach an accord as the virus puts the world economy on course for its worst performance since 2009. Saudi Arabia has been pushing for deeper production cuts over the last few weeks, but Russia has so far taken a more cautious stance. One silver lining for markets is that prices are now at a level that may be uneconomic for US shale producers.

“I have never known so much uncertainty in the oil market — and especially so many large uncertainties,” Fereidun Fesharaki, chairman of FGE wrote in a report.

Brent for May settlement dropped 3.9% to $49.73 a barrel on the ICE Futures Europe exchange as of 9:31am in London. The less actively trade April contract, which expires on Friday, held just above $50. The global crude benchmark traded at a $5.09 premium to West Texas Intermediate.

WTI futures for April delivery fell 4.3% to $45.06 a barrel on the New York Mercantile Exchange, poised for the biggest weekly drop since December 2008.

The Opec+ talks are scheduled for March 5-6 after Russia, whose budget is more resilient to lower oil prices, rebuffed pressure from Saudi Arabia for an earlier emergency meeting to deal with the outbreak. Combined Opec output, not including Russia and other allied producers, is already at the lowest level since 2009.

The kingdom is now pushing for collective Opec+ production cuts of an additional 1 million barrels a day, which it would bear the brunt of, according to a report in the Financial Times. That’s more than the 600,000 barrels per day of reductions that were recommended earlier this month by an OPEC+ technical panel.

Current oil prices acceptable: Putin

Moscow: Russian President Vladimir Putin said on Sunday that current oil prices were acceptable despite their steep decline last week driven by concerns about the global spread of the coronavirus.

The Organization of the Petroleum Exporting Countries, Russia and other producers, known as Opec+, are due to meet in Vienna this week to decide on further policy as their supply cut deal expires at the end of March.

Several key Opec members are leaning towards a bigger than previously expected oil output cut, four sources with knowledge of the talks have told Reuters. Russia is yet to outline its stance on proposals for further cuts.

“I want to stress that for the Russian budget, for our economy the current oil prices level is acceptable,” Putin told a meeting with Russian energy officials and producers to discuss the coronavirus and its implications.

However, he also said it was difficult to forecast future moves in oil prices and Russia needs to be ready for various scenarios.

The price of Brent crude slumped to $50.05 on Friday, its lowest since late 2018 on fears the coronavirus outbreak will hit oil demand badly.

Opec+ has “proved to be an effective instrument to ensure long-term stability on global energy markets,” Putin told the meeting, with his comments released on the Kremlin website.

“Thanks to that we have obtained extra budget revenues and, what is important, provided a possibility for upstream companies to confidently invest in promising development projects.” Russia, which has more than $560 billion in its reserves, sees its budget balanced at an average Brent crude price of $42.2 per barrel this year.

“Our accumulated reserves, including the National Wealth Fund, are enough for ensuring a stable situation, the fulfilment of all budget and social liabilities even under a possible deterioration of the global economic situation,” Putin said.

Putin asked participants at the meeting for their views on further possible actions on the global oil market and said he hoped that steps taken by Russia to prevent the spread of the virus were effective.