[ad_1]
Published
By Agence France-Presse
Major oil producers were trying to finalize a crucial deal on production cuts in the small hours on Friday in a bid to counter a collapse in prices due to the coronavirus and a price war between Saudi Arabia and Russia.
Oil prices are around the two-decade low, hit by the virus and a battle between Saudi Arabia and Russia over market share (AFP Photo / Frederic J. BROWN)
The video conference meeting of OPEC countries and their OPEC + allies, including Russia, as well as other key non-members, started just after 1440 GMT on Thursday and continued into the wee hours of the night.
Iranian Oil Minister Bijan Namdar Zanganeh told state television on Thursday night that a deal represented “80 percent” of the way to a deal.
“Due to the coronavirus pandemic, if we do not reduce daily oil production by 15 million barrels per day in May, we will see oversupply that will cause a price shock,” said Zanganeh.
Local media reports in Russia and Algeria said an agreement had been reached to cut production by 10 million bpd, but this has yet to be confirmed.
The meeting is seen as the best opportunity to support prices that have been rolling near the two-decade lows and avoid another sell-off.
At the beginning of the meeting, OPEC Secretary General Mohammad Barkindo warned that the rapid economic damage caused by the virus meant that the “fundamentals of supply and demand in the industry are horrible.”
“Our industry is bleeding; No one has been able to stop the bleeding, “Barkindo said, lamenting that the companies have already filed for bankruptcy and tens of thousands of jobs have been lost.
Algerian Energy Minister Mohamed Arkab also warned of “an intolerable free fall” in the market, according to the APS agency.
– Global stop –
“The extraordinary gathering of producing countries is the only hope on the horizon for the market that could prevent a total collapse in prices,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
Saudi Arabia will host a separate virtual meeting of G20 group energy ministers from major economies on Friday in a similar attempt to ensure “market stability.”
Oil prices have plummeted since the beginning of the year as the COVID-19 pandemic causes much of the planet to crash and puts the world economy in virtual stalemate.
To compound the problem, Riyadh and Moscow have increased production in an attempt to maintain market share and undermine US shale producers. USA
“Saudi Arabia and Russia have been extremely clear that they will cut production if, and only if, other major oil producers also join,” said Bjarne Schieldrop, oil analyst at SEB.
However, there are concerns about the involvement of US producers.
The United States is struggling to breathe new life into its oil shale industry, which has transformed the nation into the world’s top producer, but cannot maintain its high-cost base as prices collapse.
However, its oil sector seems reluctant to cut production, having extracted almost 13 million barrels per day in the last week of March. This fell to 12.4 million bpd last week.
At the same time, global oversupply, already weighing on oil markets before the new coronavirus crisis, has reduced oil storage capacity to its limits, forcing many producers to cut production.
United States President Donald Trump told reporters on Wednesday that he wanted to save jobs.
“Obviously, for many years I used to think that OPEC was very unfair … I hated OPEC … But somewhere along the line it broke and went in the opposite direction,” he said.
In his opening statement to the meeting held by the Rossiya 24 channel, Russian Energy Minister Alexander Novak welcomed the presence of several nations outside the OPEC + alliance, namely Canada, Norway, Argentina, Colombia, Egypt, Indonesia, Chad, Ecuador and Trinidad and Tobago.
The International Energy Agency warned Monday that the world is poised for its first annual decline in oil consumption in more than a decade due to the coronavirus pandemic.
The outbreak has closed large sectors of the world economy, including key sectors such as air travel, manufacturing, and retail.
Global excess oil could hit 25 million bpd in April, according to Rystad Energy.
[ad_2]
