OPEC agrees to the largest oil cut since 2008

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VIENNA (Reuters)

OPEC agreed yesterday, to cut oil production by an additional 1.5 million barrels per day in the second quarter of 2020 to support prices affected by the outbreak of the Corona virus, but made its move conditional on the accession of Russia and other countries.
Expectations for oil demand have been dented by 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 shrunk as factories are disrupted, travel reluctant and other business activities slowed.
Saudi Arabia is urging OPEC and its allies, including Russia, to reduce significantly to 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 the major producers of the Organization of the Petroleum Exporting Countries are finding Difficulty persuading Russia to support the move. And Moscow still hints at its intention to support an extension of the cut, rather than a new cut.
In a sign that the bargaining is not over, Russian Finance Minister Anton Silyanov said that Moscow has not yet reached an agreement with OPEC, and it is ready for a possible decline in oil prices.
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. OPEC + ministers will meet today, Friday, in Vienna.
OPEC said in a statement, after its ministers meeting, that the outbreak of the Coruna virus had caused an “unprecedented situation” and risks what would require action. She said that the ministers agreed to cut an additional supply of 1.5 million barrels per day, until June. It is expected that non-OPEC countries will contribute 500,000 barrels per day. The organization said this would be in addition to extending existing supply restrictions to the end of 2020.
OPEC said it would hold another ministerial meeting on June 9.
His Excellency Suhail bin Muhammad Faraj Fares Al Mazrouei, Minister of Energy and Industry, said that OPEC will not bear the burden of the cuts alone, and that countries outside the participating organization should. “We are all together in this,” he added. So the decision will not be ours alone. “
Earlier, sources from OPEC indicated that the initial talks with Russia this week in Vienna are more difficult than before.
When asked what would happen if Russia refused to join the new cut when OPEC, Russia and other producers outside of it met today, Friday, an OPEC source said: “The worst scenario is just an extension.”
The last time OPEC cut supply by this amount, in 2008, when it cut production by 4.2 million barrels per day, in the face of slowing demand due to the global financial crisis.
Brent crude prices gave up gains by 13:00 GMT, to be traded near $ 51 a barrel, after initially increasing 0.6% on news of the OPEC cut plan, which highlights the uncertainty surrounding the true impact of the virus on global demand in light of its continued spread .

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