Russian Energy Minister Alexander Novak said that he needs more time to assess the impact of coronavirus on oil demand before he would agree to deeper cuts. Russia’s stance is due to be announced this week.
“[We do] not fully understand the situation and clear forecasts for the development of events in connection with coronavirus,” Novak said, according to state news agency TASS. “To do this, more time is needed to see how the situation will develop, what [the] impact will be on world markets for oil.”
The OPEC+ joint technical committee met in Vienna last week to discuss the potential impact of coronavirus on the market, and how the organistion should respond.
Fears about a drop in demand from the world’s biggest oil importer China, the epicentre of the coronavirus outbreak, led to a drop in oil prices, with Brent crude down almost $11 per barrel since the start of the year. However, Novak said that a 150,000 to 200,000bpd decline in oil demand was “insignificant,” and noted that there is “no data, no information” to suggest that China would limit purchases from Russia.
OPEC+, the alliance between OPEC and its allies, is scheduled to meet in Vienna on March 5 and 6 to review its production cuts. OPEC+ has cut 1.7mn barrels per day of production as of January, deepening its previous output cuts due to expectations of weaker demand in the first quarter of 2020. Saudi Arabia has cut an additional 400,000bpd of its production.
Oman’s Energy Minister Mohammed Al Rumhy told Reuters that he would support deeper cuts. “Oman supports the recommendation of OPEC+ JTC for a potential short, deeper cut agreement, where OPEC+ would reduce oil output immediately until the end of the second quarter, while we continue monitoring the impact of the coronavirus on oil demand growth,” he said. Oman is a non-member and part of the OPEC+ deal.
