OPEC+ Considers 500,000 Bpd Cut In Emergency Meeting

The OPEC+ group of producers are said to be considering deepening the cuts by another 500,000 bpd, due to depressed oil demand amid the virus outbreak, OPEC and industry sources told Reuters on Monday.

There’s also growing speculation that OPEC may move up the meeting scheduled for March 5-6 to February.

OPEC and its allies are now considering moving the meeting to February 14 and 15, three weeks earlier than initially planned, an OPEC source told Reuters today.

Since the start of the virus outbreak last month, while oil prices have dropped by around 15 percent in two weeks. 

Early on Monday, oil prices were also depressed, weighed down by continued fears that the travel restrictions and the slowdown in China’s economy will have taken a toll on oil demand not only in China, but also in wider Asia.

Despite last week’s assurances from OPEC’s leader and largest producer, Saudi Arabia, that OPEC+ has “the capability and flexibility needed to respond to any developments,” and despite the United Arab Emirates (UAE) chiming in to downplay what it called a “market over-reaction,” OPEC is now facing a tough dilemma how to proceed with its price-fixing policies, considering that the market is so bearish on demand that it is totally ignoring a huge loss of supply from Libya.

OPEC is inclined to extend the ongoing production cuts at least through June and could discuss deeper cuts if need be, OPEC sources told Reuters last week, as oil prices continued to slide on fears that the coronavirus outbreak will impact oil demand.

Russia is ready to react and doesn’t see any problem meeting with its OPEC allies earlier than planned, Russian Energy Minister Alexander Novak said on Friday, noting that it’s too early to say how hard the virus is hitting oil demand.