OPEC and its allies are debating more aggressive oil output cuts than previously considered after reviewing new data Tuesday that showed the coronavirus’s deepening impact on global oil demand, officials at the cartel said.
Delegates from the so-called OPEC-plus alliance are in Vienna for a technical meeting to discuss possible action following the coronavirus outbreak, according to the cartel officials. The virus, which originated in China, has already contributed to a sharp decrease in demand for crude, driving oil prices to bear-market territory on Monday.
The officials said they are set to issue recommendations this week. A final decision would come after a meeting of the Organization of the Petroleum Exporting Countries and its allies, likely sometime next week, they said.
OPEC and a 10-nation group of allies led by Russia had initially considered cutting 500,000 barrels a day, according to officials at the cartel. But a handful of scenarios up for discussion at the gathering Tuesday foresee a need for much larger production cuts, according to officials.
One projection, which assumes the virus outbreak will be severe and last six months, suggests the market would be oversupplied by 1 million barrels a day in the second quarter if the cartel and its allies fail to act, the OPEC officials said. To counteract this, the alliance would therefore have to cut output by 1 million barrels a day, but by no more than that.
Another scenario foresees a more moderate impact, resulting in a projected excess of 800,000 barrels a day in the second quarter, they said—meaning the alliance would have to cut output by at least 800,000 barrels a day and by no more than 1 million barrels a day.
Related Content
The scenarios forecast demand growth being slashed by between 202,000 and 124,000 barrels a day for the full year, the officials said. Under either scenario of production cutting for the second quarter, OPEC is likely to ease its curbs later this year to avoid undersupplying markets.
The impact of the health crisis in China is rippling through distant oil-exporting nations as reduced refining demand hits the price they charge and the vital revenue they need to cover their budgets.
Saudi Arabia, OPEC’s de facto leader, is pushing for the cartel and its oil-producing allies to make a deep, short-term production cut as it seeks to stem the oil-price slump driven by the virus.
“There is definitely a panic attack inside the halls of the Saudi energy ministry,” said one official familiar with the matter. “The minister does not want to wait and see what kind of impact we may have to deal with. He wants action, a quick action.”
Saudi energy minister, Prince Abdulaziz bin Salman, didn’t respond to requests for comment.
Still, a dearth of information about the virus’s impact on Chinese oil demand means OPEC “is faced with a difficult task” said Olivier Jakob, managing director of Swiss-based oil consultancy Petromatrix. “It is therefore difficult for market participants to be convinced that an additional cut of 1 million barrels a day will be enough,” he said.
Write to Benoit Faucon at benoit.faucon@wsj.com and Summer Said at summer.said@wsj.com
Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
"impact" - Google News
February 04, 2020 at 09:27PM
https://ift.tt/2GPLTt7
OPEC, Allies Weigh Deeper Oil Production Cuts to Counter Coronavirus’s Impact - The Wall Street Journal
"impact" - Google News
https://ift.tt/2RIFll8
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "OPEC, Allies Weigh Deeper Oil Production Cuts to Counter Coronavirus’s Impact - The Wall Street Journal"
Post a Comment