OPEC working on Russia to join big oil cut amid coronavirus

Reuters , Wednesday 4 Mar 2020

(FILES) In this file photo taken on December 07, 2018 OPEC President UAE Energy Minister Suhail al-Mazrouei (C) speaks as he sits with Minister of Energy of Russia Alexander Novak (left) and OPEC Secretary General Mohammed Sanusi Barkindo (r) of Nigeria during a meeting at the headquarters of the Organization of the Petroleum Exporting Countries (OPEC) with OPEC members and non-OPEC members in Vienna, Austria on December 7, 2018. - The OPEC club of oil-producing countries meets on March 2, 2020 in Vienna as they weigh how to react to a sharp drop in global oil demand due to the outbreak of the new coronavirus. (Photo: AFP)

Saudi Arabia and other OPEC members will seek to persuade Russia on Wednesday to join them in large additional oil output cuts to prop up prices which have tumbled by a fifth this year because of the coronavirus outbreak.

A technical panel of several representatives from OPEC states, Russia and other producers recommended on Tuesday cutting output by as much as an extra 1 million barrels per day (bpd) during the second quarter only.

It also recommended that existing cuts of 2.1 million bpd by the group known as OPEC+, which meets in Vienna this week, be extended until the end of 2020.

Russia has so far signalled it might be willing to agree to extending existing cuts, which expire in March, but might find it difficult to sign up to deeper cuts.

"OPEC hopes for a cut bigger than 1 million but the challenge is still Russia," an OPEC source said, saying much would depend on Wednesday's meeting between Saudi Energy Minister Prince Abdulaziz bin Salman and his Russian counterpart Alexander Novak.

The Joint Ministerial Monitoring Committee (JMMC), comprising a handful of OPEC and non-OPEC ministers, convenes in Vienna on Wednesday at about 1130 GMT. The Saudi and Russian ministers are both on that committee.

Existing cuts have 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 are travelling and other business slows, curbing oil demand.

Benchmark Brent oil prices were around $52 a barrel on Wednesday, a level at which many OPEC states will struggle to balance their budgets, although Russian President Vladimir Putin has said the current price was acceptable.

Wednesday's JMMC meeting is part of the process of drawing up recommendations for the wider meeting of ministers from the Organization of the Petroleum Exporting Countries on Thursday and a meeting of OPEC+ ministers on Friday.

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