The lack of clear data that the coronavirus outbreak is slowing feeds concerns about the global economy and prompts investors to stay in safe environments by escaping risky assets such as stocks and crude oil. Oil prices dropped on Thursday as a result of the global trend of the virus and investors’ attitude.
Brent crude LCOc1 fell $ 1.14, or 2.2%, to $ 49.99 a barrel. According to OPEC sources, the new 1.5 million bpd cut will be extended by the end of the year. Even though OPEC agreed to reduce crude production by 1.5 million barrels per day (bpd) in the second quarter, oil losses have made the deepest drop since the 2008 financial crisis.
Opec thinks that it is imperative that Russia support the supply cuts related to increasing demand. Moscow will attend the OPEC + ministerial meeting in Vienna on Friday. OPEC + talks are likely to be more controversial than yesterday’s meeting. Russia mostly implies that it has favored an extension rather than deeper production cuts. However, an increased risk of a virus outbreak last week may convince Russia to accept additional cuts.
The general view on the Russian side is that Russia is financially ready to deal with the lower oil prices and does not foresee a deeper cuts in production decision.