Nigeria, Others To Discuss Further Oil Production Cuts
Nigeria and other members of the Organisation of Petroleum Exporting Countries will gather this week to debate whether to cut oil production further as the spread of coronavirus hits demand for crude worldwide.
Reuters reported on Tuesday that OPEC ministers were starting to arrive in Vienna, Austria.
OPEC and its allies, led by Russia, a group known as OPEC+, agreed in December 2019 to a collective cut in output of 1.7 million barrels per day until the end of March.
Saudi Arabia, the world’s biggest oil exporter, has been voluntarily cutting an additional 400,000 bpd, meaning OPEC+ is effectively curbing its production by 2.1 million bpd in a bid to support oil prices.
But since then, the spread of coronavirus has weighed on economic activity worldwide and hit demand for oil.
The international oil benchmark, Brent crude, has been on a downward trend since the coronavirus broke out in China. It tumbled below the $50 per barrel mark last Friday for the first time in two and a half years but rose to $52.12 per barrel as of 7:15 pm Nigerian time on Tuesday.
OPEC ministers will meet on March 5 and then gather with ministers from non-OPEC countries on March 6.
A technical committee of the alliance met on Tuesday to review market fundamentals while a ministerial committee will convene on Wednesday at 1130 GMT.
Russia is so far not convinced about the need for a bigger cut in production, and some sources have said OPEC members could shoulder any additional curbs themselves.
But on Tuesday Leonid Fedun, vice-president of Russia’s second-biggest oil producer, Lukoil, told Reuters that an additional cut of up to one million bpd would be enough to balance the market and lift oil prices to $60 a barrel.
The International Energy Agency said in February that oil demand in the first quarter of 2020 was expected to fall by 435,000 bpd compared with a year earlier, which would be the first quarterly decrease since the financial crisis in 2009.