OPEC meets before crunch talks with Russia on cutting more oil output

Published 05/03/2020, 09:25
Updated 05/03/2020, 09:27
OPEC meets before crunch talks with Russia on cutting more oil output
LCO
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* Riyadh pushing for cuts of 1-1.5 mln bpd

* Moscow reluctant so far to cut more output

* Oil price slide hits OPEC members' budgets hard

* Virus outbreak has hammered crude demand outlook

By Shadia Nasralla and Ahmad Ghaddar

VIENNA, March 5 (Reuters) - OPEC ministers gathered in

Vienna on Thursday to discuss cutting output, a day ahead of

crunch talks with Russia which has yet to sign up to their plans

for production curbs that aim to shore up crude prices battered

by the coronavirus outbreak.

Saudi Arabia wants OPEC and its allies, including Russia, to

cut 1 million to 1.5 million barrels per day (bpd) for the

second quarter and to keep existing cuts of 2.1 million bpd in

place until the end of 2020.

But Riyadh, the biggest producer in the Organization of the

Petroleum Exporting Countries, and other members of the group

have failed so far to win over Russia's backing for the cuts

during preliminary meetings in Vienna ahead of Friday's crunch

talks.

Moscow, which has cooperated on output policy since 2016 in

an informal group known as OPEC+, has indicated it would back an

extension of existing curbs but has resisted deeper cuts,

although in the past negotiations Russia's early reluctance has

given way to a last-minute agreement.

Russian Energy Minister Alexander Novak, who met his Saudi

counterpart Prince Abdulaziz bin Salman on Wednesday, has

returned to Moscow for consultations but will return for

Friday's meeting of the broader OPEC+ group.

The Saudi minister has given little public indication of

progress towards a deal. Asked whether a ministerial panel on

Wednesday had made any recommendation for a deal, he told

reporters: "I want to keep you in suspense."

Novak made no public statements during his brief trip to

Vienna for the preliminary talks on Wednesday.

OPEC sources had said earlier this month that Saudi Arabia

might push through cuts even without Russia on board. But

sources on Wednesday indicated growing frustration with Russia,

saying Riyadh - already cutting far more than its quota demands

- did not want to shoulder an even bigger burden without Moscow.

Oil demand has been hit hard by the coronavirus outbreak.

Original forecast for growth in crude demand in 2020 have now

been slashed with factory operations, travel and other economic

activities around the world curtailed by measures to stop the

virus spreading.

Benchmark Brent crude LCOc1 has tumbled 20% so far this

year to hover around $51 a barrel, a level at which Saudi Arabia

and other OPEC producers will struggle to balance their budgets,

although Russia has said it can cope with that price.

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