OPEC agrees to the largest oil cut since 2008

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(MENAFN – Al-Bayan) Date:
March 06, 2020 OPEC agreed yesterday to cut oil production by an additional 1.5 million barrels per day in the second quarter 2020, to support prices affected by the outbreak of the Corona virus, but it made its movement conditional on Russia and other countries joining.

His Excellency Suhail Al Mazrouei, UAE Minister of Energy and Industry, said in statements during his participation in the meeting in Vienna: “OPEC will not bear the burden of cuts alone, and that the countries outside the organization should participate … We are all together in this, so the decision will not be ours alone.” Expectations for oil demand declined due to government measures to contain the virus, prompting OPEC to consider its biggest cut since the 2008 financial crisis. Expectations for demand growth in 2020 have diminished, given factory disruptions, reluctance to travel and slower business.

Saudi Arabia is urging ‘OPEC and its allies, including Russia, towards a significant reduction of 1.5 million barrels per day in the second quarter, with extending current cuts of 2.1 million barrels per day, which expires this month, until the end of 2020. But Riyadh and other members of the organization find it difficult To persuade Russia to support the move.

Moscow still hints at its intention to support an extension of the cut, rather than a new cut. In the past, Moscow, which has been cooperating on production policy since 2016 as part of an informal group known as OPEC +, expressed hesitation during the negotiations, but was participating in the last moments. And OPEC said that the Coruna outbreak had created an unprecedented situation and risked necessitating action. She said the ministers agreed to a further supply cut of 1.5 million barrels per day until June.

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