OPEC seeks big oil cut in crunch talks with Russia amid virus outbreak

Published 06/03/2020, 09:35
Updated 06/03/2020, 09:36
© Reuters.  OPEC seeks big oil cut in crunch talks with Russia amid virus outbreak

* OPEC delivered surprise with bigger than expected cut plan

* Russian energy minister due in Vienna for Friday's meeting

* Oil prices have plunged 20% this year, now trading below

By Rania El Gamal, Alex Lawler and Olesya Astakhova

VIENNA, March 6 (Reuters) - OPEC holds crunch talks with its

allies on Friday after the group told Russia and others it

wanted an additional 1.5 million barrels per day (bpd) of oil

cuts until the end of 2020, saying a big move was needed to deal

with the impact of coronavirus.

OPEC's proposal effectively presents an ultimatum to Moscow,

which has so far been reluctant to back extra curbs on supply,

even though oil prices have plunged more than 20% since the

start of the year, trading below $50 a barrel on Friday.

Saudi Arabia had been pushing for a big oil cut ahead of

this week's talks in Vienna between OPEC, Russia and other

producers, a group known as OPEC+.

But OPEC ministers, who met on Thursday, backed a proposal

for an even larger reduction than expected.

Their decision followed two rounds of talks, first a formal

session at OPEC headquarters and then an informal gathering at a

Vienna hotel, when the ministers said the extra 1.5 million bpd

of cuts should run to the end of the year not just till June.

The ministers said the market faced an "unprecedented

situation" because of the coronavirus outbreak, which has

prompted measures to stop it spreading that have dampened global

economic activity and put the brakes on demand for oil.

If Russia, which has been cooperating with OPEC since 2016,

and other producers approve OPEC's proposal, it will mean the

biggest curbs on production since the 2008 financial crisis.

But Moscow has yet to indicate its support for such a deal,

fuelling frustration in Saudi Arabia which has been cutting far

more than its quota under an existing deal to remove 2.1 million

bpd from the market since Jan. 1.

The new deal would mean supply curbs amounting to a total of

3.6 million bpd, or about 3.6% of global supplies.

Suhail al-Mazroui, energy minister of the United Arab

Emirates, said on Thursday that OPEC did not want to carry the

burden of cuts alone and non-OPEC had to help.

"We are all in this together. So it's not going to be us

making a decision alone," he said.

Russian Energy Minister Alexander Novak, who held

preliminary talks with his Saudi counterpart Prince Abdulaziz

bin Salman in Vienna earlier this week, is due back in the

Austrian capital on Friday for the OPEC+ meeting.

Novak and the Saudi prince have given little indication in

public about whether they will be able to reach a deal, leaving

the outcome of Friday's talks far from clear.

Russian Finance Minister Anton Siluanov said on Thursday he

was ready for a drop in oil prices if there was no deal.

Kazakh Energy Minister Nurlan Nogayev, whose country is

another non-OPEC producer in the OPEC+ group, said talks were

only focusing on extending existing curbs to June.

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