The Organisation of Petroleum Exporting Countries (OPEC), on Tuesday, recommended an additional 1 million barrels per day crude output cut. This is obviously a desperate move to save global oil prices following the negative effect of the Coronavirus outbreak.
The Coronavirus, which has gradually turned into a pandemic, according to health experts, had caused oil prices to crash. This is, of course, due to lower crude demands from countries like China, which have been most-hit by the virus.
In the meantime, many factories around the world remain shut out of fear of the deadly virus. Global travels have also been largely limited since the outbreak. And all of these are factors that have combined to reduce global demand for crude oil.
Before now, OPEC and its allies (OPEC+) to which Russia belongs, already decided to cut output by 2.1 million barrels per day. The deal began in January this year and was supposed to last tentatively till the end of March 2020.
Unfortunately, the virus outbreak, alongside its negative impacts, prompted OPEC to extend the deadline beyond March, while proposing the additional 1 million output cut.
“The Organization of the Petroleum Exporting Countries, Russia and other producers already have a deal in place to cut output from Jan. 1 by 2.1 million bpd, a figure that includes additional voluntary cuts by Saudi Arabia.
“But that has not been enough to counter the impact of the virus on China, the world’s biggest oil importer, and on the global economy, as factories are disrupted, fewer people travel and other business slows, curbing oil demand.”
Nairametrics, however, understands that Russia has yet to give its support to the additional 1 million per barrel output cut. According to Reuters, OPEC and Russia are still working towards coming to terms with the additional output cut.
OPEC ministers are now slated to meet in Vienna on Thursday (tomorrow) to deliberate further on the matter. As part of efforts to prevent the Coronavirus from further spreading, the number of delegates that will attend the meeting tomorrow has been limited, even journalists were informed to stay away from the venue.