The Saudis are forcing OPEC to cut oil production

Moscow, February 4 – “News.Economy” it is Expected that half of China’s economy, the second largest economy in the world, will be left without energy at least until mid-February. Several weeks ago traders started to assess the impact on the demand for oil.

And now, when it became clear that this problem will continue in the near future, after oil prices showed the largest monthly drop in 30 years, OPEC could begin to “rebalance” the global energy market.

Saudi Arabia is pushing for a significant short-term reduction of oil production, reported the WSJ on Monday morning, citing anonymous officials of OPEC.

on Tuesday and Wednesday, the group of OPEC countries and their allies, OPEC+, plan to meet to discuss possible actions in the background of the outbreak of the coronavirus in China, the world’s largest importer and consumer of oil.

One of the discussed scenarios: Saudi Arabia, the main OPEC member, will require a total reduction of 500 thousand barrels per day. According to representatives of the cartel, the production decrease will continue as long as the outbreak of the coronavirus will not decline.

Another, more radical option involves a temporary decrease of 1 million barrels per day. This reduction will lead to a sharp boost in the market (and potentially another stream of angry tweets, trump on oil prices).

According to the WSJ, the cartel is still divided and unable to come to a common decision about what to do. Plans to hold a full meeting of the cartel and its allies, headed by Russia have been cancelled. Decided to hold a meeting on which will discuss the impact of the outbreak of the coronavirus in global demand.

OPEC and its allies are divided over how to manage oil supplies against the deadly coronavirus, which has already resulted in a decline in demand in China. Collectively producelei oil is more effective in terms of supporting oil prices, which fell by 15% last month.

Despite the insistence of Saudi Arabia, the cartel and 10 allied countries led by Russia decisively thwarted attempts to schedule an emergency meeting of the full delegation this week. Instead, they will hold a technical meeting to determine how to cope with the impact of coronavirus and make recommendations to the members.

Producers will decide whether to hold a little meeting, headed by Saudi Arabia and Russia, or the summit of all 23 manufacturers in Vienna, said officials.

oil Prices rose on a background report. If the probability that the cuts will be confirmed, the rebound will be even more pronounced. Text: News.Economy