COVID-19: OPEC to halt sharp fall in oil prices as the epidemic spreads

The OPEC club of oil-producing countries meets Thursday in Vienna as they weigh how to react to a sharp drop in global oil demand due to the outbreak of the new coronavirus.

The extraordinary two-day meeting will see OPEC, led by Saudi Arabia, and its allies in the so-called OPEC+ group — foremost among them Russia — discuss how to halt the sharp fall in oil prices in the past two months as the epidemic has spread.

At their last meeting in December, the producers agreed to cut production by 500,000 barrels per day, with Saudi Arabia offering a further 400,000 barrels of “voluntary” cuts.

Prices were already under pressure at that point from abundant reserves and weak global growth.

The cuts announced in December initially had the desired effect of an uptick in prices but the epidemic has since sent them plunging back down again.

The two benchmarks for oil prices, Brent in Europe and WTI for the US, have fallen around 30 percent since early January and have tested their lowest levels for more than year.

In Asian trade on Tuesday Brent crude was up 2.5 percent at $53.17 per barrel and West Texas Intermediate was 2.7 percent higher at $48.01.

OPEC’s “joint technical committee” (JTC) met last month and recommended a cut of 600,000 barrels to ward off the effects of the coronavirus slowdown.

But according to Craig Erlam, analyst at Oanda, this figure “won’t be enough”, with huge oil consumer China still mired in the fallout from the virus and outbreaks now occurring around the world.

Last week the Financial Times reported that Saudi Arabia wanted to bring the cut up to a million barrels a day.