Saudi Arabia and other OPEC members are seeking support from Russia to participate in additional oil production cuts to increase prices that have dropped by a fifth this year due to the coronavirus outbreak. However, OPEC, Russia and other manufacturers have not signed a preliminary agreement for additional cuts.
Meanwhile, is said that Russia suggests to the group known as OPEC + to keep the existing cuts by the end of the second quarter.
Saudi Arabia seems to support the current 2.1 million bpd cut by the end of 2020, while demanding 1 million to 1.5 million barrels (bpd) of extra cuts for the second quarter.
Negotiations have yet to be reached a final decision between the talks of the chief actors Prince Abdulaziz bin Salman and Russian Energy Minister Alexander Novak.
Although Russian President Vladimir Putin says the current level is acceptable for Moscow, oil prices at these levels are too low to balance the budgets of many OPEC countries.
Moscow is thought to be concerned about the rise of shale in the US, which is not part of OPEC. US producers continue to increase production at the expense of the group.
Current cuts are not enough to counteract the impact of coronavirus on the world’s largest oil importer China and the global economy. Factories have stopped production, fewer people are traveling, and oil demand is falling as other oil-related jobs have been slowing down.
Whatever OPEC does for now, it seems unlikely to produce the desired effect of rebalancing the market and increasing prices significantly. The hope of the benefit of regaining demand will continues later in the year.