Opec closes in on record deal with Russia to cut oil production by 20m barrels a day
Oil producer cartel Opec is in talks with Russia about cutting production by 20m barrels per day, roughly 20 per cent of the world’s oil supply, in a bid to end their price war and support the market.
Sources from both sides told Reuters that the cuts, which are at least 5m barrels per day higher than previously touted, were under discussion.
However, it is unclear whether the vast proposals include commitments from the US to cut shale oil supply, which both Opec and Russia had been expected to demand.
The cuts would be the largest the producer group has ever made, dwarfing the 2.2m barrel per day cut enacted during 2008’s financial crisis.
Sources said that there had been initial tension between Russia and de facto Opec leader Saudi Arabia, but that these had now been resolved.
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Benchmark Brent oil prices hit an 18-year low last month and are trading around $35 a barrel, almost half their level at the end of 2019, dealing a severe blow to budgets of oil producing nations and high-cost US. shale oil industry.
Global fuel demand has plunged as much as 30m barrels per day, 30 per cent of global supplies, as measures to fight the coronavirus have grounded aircraft, reduced vehicle usage and curbed economic activity.
Prices had edged upwards today as traders awaited the result of the conference, which is taking place by video call.
However analysts have said that the talks were on a knife-edge, with the combination of nations around the table a recipe for heightened political tensions.
“It’s finely balanced, and could go either way”, global economist Cailin Birch of the Economist Intelligence Unit told City PM