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NOPEC! Oil prices plummet after Russia rejects new crude production cuts NOPEC! Oil prices plummet after Russia rejects new crude production cuts
(about 7 hours later)
Moscow has refused to back the Organization of Petroleum Exporting Countries (OPEC) in extra reductions in oil output and would only agree to extend existing cuts, TASS reported on Friday, citing its own sources. Cooperation between Russia and the Organization of Petroleum Exporting Countries (OPEC) has got to an abrupt stop after Moscow refused to back new deeper cuts on oil output. The move has sent oil prices into a downward spiral.
According to the sources, Russia has rejected any offers on additional output cuts during informal consultations in Vienna on Friday. Moscow has long indicated it would back an extension of the current agreement but not new cuts.
Iranian Oil Minister Bijan Zanganeh, whose country is a member of OPEC but is exempted from any curbs, said OPEC was still working with Russia and other non-OPEC states to reach a deal. The OPEC and non-OPEC countries held the consultations on oil cuts consultations in Vienna on Friday, yet failed to agree on them.
OPEC on Thursday agreed to cut its output by an extra 1.5 million barrels per day (bpd) in the second quarter of this year – but only if Russia joins in. If agreed, the production cut could become the deepest one since the 2008 financial crisis. The talks followed the OPEC decision to cut the output by an extra 1.5 million barrels per day (bpd) in the second quarter of this year — but only if Russia joins in. The new cuts were expected to come on top of the already existing cuts of 2.1 million bpd, becoming the largest ones since the 2008 financial crisis.
The oil cartel and its allies also aim to keep existing cuts of 2.1 million bpd, which expire this month, in place until the end of 2020. Russia, however, has rejected the new cuts, calling only for extension of the already standing ones — and the disagreement within the so-called OPEC+ has effectively brought the existing system of restrictions down.
“From April 1 neither OPEC nor non-OPEC have restrictions,” Russian Energy Minister Alexander Novak told reporters after the talks. The OPEC+ cooperation, however, will continue, the minister added, as the participants have signed a respective joint document in the aftermath of the talks.
So far, it remains unclear whether Russia will increase its oil output. According to Novak, it depends on “the plans of the companies.”
Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman was even more ambiguous and dodged the question on the kingdom’s potential plans to ramp up its production altogether.
“I will keep you wondering,” the minister told reporters.
Oil demand has been hit hard by the Covid-19 outbreak, with crude prices plummeting 20 percent this year.Oil demand has been hit hard by the Covid-19 outbreak, with crude prices plummeting 20 percent this year.
The coronavirus outbreak created an “unprecedented situation” with risks “skewed to the downside” and demanding action, OPEC said, in a statement published after its ministers met. It added that it would hold another ministerial meeting on June 9.The coronavirus outbreak created an “unprecedented situation” with risks “skewed to the downside” and demanding action, OPEC said, in a statement published after its ministers met. It added that it would hold another ministerial meeting on June 9.
Global crude prices plummeted on Friday on the news, with Brent crude trading over five percent lower at $47.55 per barrel, and US benchmark West Texas Intermediate (WTI) falling nearly as much to $43.57.Global crude prices plummeted on Friday on the news, with Brent crude trading over five percent lower at $47.55 per barrel, and US benchmark West Texas Intermediate (WTI) falling nearly as much to $43.57.
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