It’s members and it’s co conspirer Russia has reportedly called for an “emergency meeting“ trying to get ahead of the coronavirus that has created a drastic drop in global oil demand. Not only has demand fallen because of parked planes and trains but over concerns that the coronavirus may cause a fear-related decline in economic growth.
OPEC along with its coconspirator Russia and a few other non-OPEC nations agreed in December to oil production by 1.7 million barrels per day (bpd) until the end of March but now it looks like they will have to cut again to stabilize the oil market.
It was Saudi Arabia that called for an early OPEC Plus meeting that was initially scheduled to take place on March 5th and 6th. Russia initially was playing hard to get and telling OPEC that there was no need for an emergency meeting at this time.
Yet on Friday, that changed after oil prices continued to plunge. Russian oil minister Alexander Novak reportedly said that they were finally ready to move the March meeting to February but would need several more days to assess the impact and decide on the actual date of the meeting.
“We have discussed it with the Saudi (energy) minister several times already … Yesterday, we spoke for an hour, today, for half an hour. We are discussing it very seriously,” Interfax quoted Novak as saying.
Demand destruction is estimated at around 200,000 barrels a day. To get ahead of it and to make a statement, they should announce a cut of 500,000. That should more than offset demand losses and it will allow stability to come back into the marketplace.
If they stabilize the price of oil, it may go a long way to bringing confidence back to the market as the fear surrounding the coronavirus will be worse than the reality.
Source: Fox Business – https://www.hellenicshippingnews.com/as-coronavirus-rages-oil-collapses-and-opec-hits-panic-button/