(5 Mar 2020) The oil-producing countries of the OPEC cartel are calling for a deep production cut of 1.5 million barrels per day to support prices that are sagging due to the spread of the new virus. The proposal, however, assumes that non-member allies like major producer Russia, who will take up the proposal Friday, will agree to the cuts.
Iranian Oil Minister Bijan Zangeneh said after Thursday's meeting in Vienna that the cut would be for the second quarter of this year, and would be “subject to the acceptance” of non-OPEC allies, which have in recent years been coordinating cuts with the cartel.
OPEC issued a statement saying that member countries would cut 1 million barrels per day, while non-members would share a further cut of 500,000 barrels per day.
Saudi Oil Minister Prince Abdulaziz bin Salman, asked as he left the meeting if Russia was on board, said: “We'll see tomorrow.”
The meeting of oil ministers from OPEC's 14 countries was visibly affected by the coronavirus as journalists were barred from the headquarters building.
Producing countries are trying to shore up prices amid falling demand.
Countries have been abiding by the recent cuts unevenly, with some nations quietly producing more than they agreed to.
OPEC’s decisions to cut production have dwindling ability to boost oil prices, in part because the US has been flooding the market with cheaply-produced crude.
By late Wednesday, the international benchmark for crude was trading at 51.25 US dollars a barrel, down from around 69 US dollars at the start of the year.
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