A committee meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) is set to extend into a third day as the gathering debates how to effectively respond to waning oil demand triggered by the coronavirus.
Four sources familiar with the talks told Reuters news agency that the meeting on Wednesday ended with no concrete recommendation. One source said Russia is not supportive of a deeper oil output cut and is suggesting an extention to the output cut that was agreed upon in December and that is set to last until the end of March.
“Russia prefers an extension. They are not supporting [a cut],” the source said.
The Joint Technical Committee advises OPEC members and the cartel’s allies led by Russia, a grouping known as OPEC+.
On Monday, the Wall Street Journal and Reuters News Agency citing OPEC and industry sources reported that the oil cartel’s kingpin, Saudi Arabia, is pushing for a deep, short-term oil production cut of 500,000 barrels per day (bpd).
Another scenario would see the kingdom implement a temporary cut of one million barrels a day to jar oil prices, said the Wall Street Journal, citing OPEC officials.
It is not uncommon for Russia to signal disagreement with OPEC’s preferred strategy before ultimately agreeing on policy during formal meetings.
Oil prices have fallen by more than $11 a barrel this year to $55, alarming producers. OPEC+ is weighing further output cuts, extending the duration of existing curbs and possibly moving up a planned policy meeting to February from March 5-6.
Two other OPEC sources told Reuters that the OPEC+ meeting date was unlikely to be brought forward unless there is general agreement on the need to reduce output further.
“If there is only an extension [to current cuts], then we will meet in March as agreed before,” one of the OPEC sources said.
OPEC+ has been reducing oil supply to support prices, agreeing in December to cut output by 1.7 million bpd through March.
While OPEC countries such as Iraq have voiced support for any agreement that would stabilise the market, Russian Minister of Energy Alexander Novak said on Tuesday that he could not say for sure whether it was time to tighten output curbs.
Estimates of how deeply the coronavirus could dent oil demand vary widely. China is the world’s biggest consumer of oil and the epicentre of the outbreak.
BP Chief Financial Officer Brian Gilvary said on Tuesday that the economic slowdown resulting from the virus outbreak is expected to reduce 2020 global demand growth by 300,000-500,000 bpd, or roughly 0.5 percent of global demand.
Oil jumped by more than three percent on Wednesday on media reports that scientists had developed an effective drug against the coronavirus, raising hopes that its impact would be limited.
But the World Health Organization played down those reports.
Saudi Arabia’s economy remains reliant on hydrocarbon revenue despite plans to diversify. The kingdom needs prices of around $80 per barrel to balance its state budget, while Russia needs much lower prices of around $42.