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Opec to mull output cuts over virus outbreak
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Opec to mull output cuts over virus outbreak

VIENNA: Delegates from the Opec club of oil-producing countries — as well as their ally Russia — began a meeting at the organisation’s headquarters in Vienna on Tuesday to discuss their reaction to China’s coronavirus epidemic and its impact on global demand.

Crude prices have tumbled since the deadly outbreak in the world’s second-biggest economy, which is a huge consumer of crude.

Earlier the oil ministry of Iraq, Opec’s second-biggest producer, said the bloc was considering a further cut to crude oil output.

Opec said on Tuesday that its “joint technical committee” meeting was briefed on China’s reaction to the crisis by the Chinese ambassador to the UN in Vienna Wang Qun.

The club’s Secretary-General Mohammad Barkindo “reiterated Opec’s full support to China and praised the leadership for its rapid and strategic response to the outbreak,” the organisation said in a tweet.

Barkindo called China’s reaction “impressive and commendable”.

Earlier Iraq’s oil ministry spokesman Assem Jihad said: “Depending on the needs of the market and how it’s been affected by the coronavirus, will a cut be necessary? This is being discussed as the technical reports are presented.”

Jihad told AFP that any recommendations from the meeting would be relayed to ministers and that “any further cut to outputs would only be announced in a ministerial meeting”.

Jihad said delegates would also consider bringing forward an Opec ministerial meeting planned for March to February “depending on the market’s needs and what happens with the virus”.

Russian Energy Minister Alexander Novak also said the schedule could be changed.

“We have a meeting in March but we can hold it earlier if necessary,” he told reporters.

The new coronavirus has killed more than 400 people and infected a further 20,000 in China since emerging in December and has also spread to more than 20 other countries.

The US benchmark oil contract, WTI, has fallen by around 18 per cent over the past month.

At 16:05 GMT on Tuesday WTI was trading at $50.56 per barrel and its European equivalent Brent stood at 54.79, both up slightly from close of trading on Monday.

“For now, the market seems content that China will contain and manage the virus situation, and that the worst will soon be over with no accelerated spreading outside of China, and that Opec+ will step in with cuts and prevent a surplus and a stock building,” said Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB.