OPEC divided on how to combat coronavirus fallout

VIENNA - Ministers from the OPEC group of oil-producing countries will meet in Vienna Thursday to try to overcome their divisions on how to react to the fall in oil prices in the wake of the novel coronavirus epidemic.

The group already had to contend with abundant supply on global markets weighing on prices but the spread of COVID-19 across the world has sent them plunging.

The European benchmark of Brent sank to under 50 dollars on Sunday, a level not reached since July 2017.

The effects of the virus on global demand -- particularly in worst-hit China -- has blown a hole through the group's attempt to support prices at its last meeting in December by agreeing on production cuts.

The only option for OPEC -- and its allies in the OPEC+ grouping who will be joining meetings on Friday -- would appear to be another round of production cuts.

The success of the summit, which has been called 3 months ahead of the next scheduled meeting, will above all hang on the alliance between Russia and Saudi Arabia, the world's second and third-biggest producers and the most important players in the OPEC and OPEC+ groupings respectively.

"Their objective will be to overcome their differences of opinion so as to be able to speak with one voice from tomorrow," said Carsten Fritsch, analyst at Commerzbank.

DIVISIONS LAID BARE

The splits on the way forward even within OPEC were on display on Wednesday as delegations arrived.

The chairman of Libya's National Oil Corporation Mustafa Sanallah said he was wary of any additional cuts.

"I think there's no need to reduce," Sanallah told AFP, adding: "I think the price is good right now."

However Iran's Oil Minister Bijan Namdar Zanganeh said a cut of "at least... around half a million barrels" was necessary to stabilize the market.

Saudi Arabia is also a supporter of further cuts, with Riyadh even thought to be amenable to a cut in the order of a million barrels per day.

But Russia may be harder to convince on this score, with Russian President Vladimir Putin being quoted on Sunday as saying the current market price was "acceptable" and above the level foreseen in Russian economic planning.

Russia's RIA Novosti agency reported Wednesday that Moscow's delegation was proposing an extension of the existing deal with no fresh cuts.

FOOTSHAKE

Aside from bridging their differences on the effect of the virus on the market, the assembled diplomats are also having to accommodate changes to their routines in Vienna.

Two medical workers were on hand to screen the temperatures of all those entering OPEC headquarters on Wednesday.

OPEC's Secretary General Mohammed Barkindo and Russian Energy Minister Alexander Novak were seen in a video tweeted by the organization attempting a "footshake", gently bumping the sides of their feet together in a more hygienic alternative to a handshake.

The cartel has also taken the extraordinary step of barring access to its headquarters for the media due to the "risk that would come from convening such a vast number of people in one place".

Livestreams of the beginning of meetings will instead be made available to journalists at a press center assembled in a nearby hotel.

In a statement on Tuesday OPEC said it was following UN guidelines for such meetings and planned to "shorten the format of such gatherings, limit the number of participants and cancel any related side-events".

source: news.abs-cbn.com

Oil market likely to rebalance early 2019: OPEC ministers

KUWAIT CITY, Kuwait -- Oil ministers from leading OPEC nations said Sunday they expect prices will arrest their recent slide and rebalance early next year, when a deal on new production cuts takes effect.

Oil prices have shed more than 36 percent since early October to trade at $54 per barrel, due to fears of oversupply and weak global demand.

But OPEC president and United Arab Emirates Energy Minister Suhail al-Mazrouei said the surplus in the oil market was small compared to 2017 and expected it to vanish in one or two months.

"Based on available figures, we have around 26 million barrels of surplus... compared to 340 million barrels in early 2017," the minister told a press conference in Kuwait City.

"I think that we can easily do with this surplus and reach market rebalance in one or two months... in the first quarter of next year," he said.

OPEC -- a cartel of producer countries that has long manipulated output of the commodity to influence global prices in members' favor - and non-OPEC members agreed in early December to trim production by 1.2 million barrels a day from January 1, in a bid to shore up sagging prices.

Mazrouei said that there has been higher than anticipated supply on the market in recent months, as US sanctions on Iran have had a less pronounced effect on the country's oil exports than had been expected.

Iraq's Oil Minister Thamer al-Ghadhban said that there is a consensus among OPEC and non-OPEC producers to comply with the new agreement to trim output in a bid to stabilize the market.

He said the new agreement is valid for 6 months and that the ministers will meet in April to assess the impact of the cuts.

Ghadhban said he believes that the new measures taken by producers will "stop the slide in oil prices."

Mazrouei said that producers are ready to renew the agreement or increase cuts in case the market does not balance.

"If the production cuts of 1.2 million barrels a day is not enough, we will meet again to see what is enough and apply it," he said.

During their meeting next April, the producers are also expected to sign a long-term agreement to formalize cooperation between OPEC and non-OPEC members over oil output.

OPEC has lately been cooperating closely with Russia and other non-cartel producers, in a bid to impose greater control over global output and prices.

source: news.abs-cbn.com