The world’s largest oil-producing states will hold an emergency meeting on Thursday. It tries to negotiate a reduction in historic oil production cuts. As the Coronavirus epidemic continues to crush crude oil demand worldwide. ۔ Schieldrop says that “We don’t expect anything will be decided before the G-20 meeting,” partly because OPEC+ meeting was “prompted” by President Trump.
OPEC + is going to talk via video link from 4 pm Vienna time to discuss the next stage of oil production policy.
President Donald Trump has raised expectations of an OPEC + cut more than any deal before. It suggests that the energy alliance could take 10 to 15 million barrels of crude oil into the market.
On Thursday afternoon, international benchmark Brent Crowd traded at $34.20 a barrel, more than 4 percent. While the American West Texas Intermediate (WTI) stood at $26.65, up 6 percent higher.
A stewing dispute between OPEC kingpin Saudi Arabia and non-OPEC pioneer Russia is believed to be one of the numerous potential complexities to a historic oil production cut.
Record depletion still not enough
In a research note published on Thursday, Goldman Sachs analysts said. “Assuming that the deal has been reached – now in our fundamental case – the key question will be whether its size and timing will improve global oil balances sufficiently to support prices above current levels,”
“This is vital, like a cut that might prove insufficient too late. It would cause storage saturation and save necessary production shut-in, with distress producers driving physical transplanted prices. Also, spot oil prices sharply lower.”
“Our updated 2020 global oil balance suggests that a ten million barrels per day headline cut wouldn’t be sufficient, still requiring necessary price induced shut-ins on top of such voluntary curtailments,” they added.
On Thursday morning, Reuters, citing two unnamed OPEC sources. It reported that Riyadh and Moscow still disagree over the baseline and volumes for any oil production cuts.
Shortly thereafter, a spokesperson for Russian President Putin told Reuters that the Kremlin had no plans to debate oil markets with the leadership of Saudi Arabia or the U.S. on Thursday.
Saudi Arabia and Russia, who fell out when a previous pact to curb supply broke down last month, have signaled that any decision would depend upon the U.S. and other non-OPEC producers joining in.
OPEC+ Oil Production Cut
Trump has shown no appetite to mandate. Such a policy but suggested earlier within the week that boring in the U.S. had already fallen.
Energy ministers from the Group of 20 major economies will convene for his or her own extraordinary video conference on Friday.
The G-20 presidency said that the meeting will be held “to foster global dialogue and cooperation to make stable energy markets. And also enable a stronger global economy.”
OPEC+ hopes to influence non-OPEC producers present at the G-20 meeting. Like the U.S., Canada, Norway, and Brazil to participate in boring cuts. Saudi Arabia, OPEC’s de-facto leader, holds the rotating G-20 presidency this year.
How did we get here?
The coronavirus pandemic has meant countries around the world had to pack up. As many governments imposing severe measures on the daily lives of billions of individuals.
The restrictions have created an unprecedented demand shock in energy markets. Even as a price competition broke out between powerhouse producers Saudi Arabia and Russia.
Last month, Saudi Arabia recommended cutting production by 1.5 million barrels per day because the coronavirus outbreak curbed demand.
However, Moscow rejected the proposal, thus bringing an end to the group’s three-year production-cutting pact on March 31.
Saudi Arabia, Kuwait, and therefore the United Arab Emirates have all since ramped up oil production output.
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