OPEC to extend oil output cuts till June Cause of Coronavirus
OPEC sources have confirmed to Reuters that they want to extend the current cuts in oil production until June 2020, with the possibility of making further cuts if oil demand in China is greatly affected by the spread of a new Coronavirus.
The sources add that the rapid decline in oil prices during the past few days has caused concern for OPEC officials, as the new virus has raised concerns about a blow to economic growth and demand for oil.
As the price of oil fell for the sixth day, Brent crude remained below $60 a barrel, it reached a three-month low of $58.50, due to global sales of assets that are at high risk due to the virus outbreak.
The Kingdom of Saudi Arabia, the United Arab Emirates, Algeria, and the Sultanate of Oman have tried to allay fears in the market, and urged caution against bad expectations about the impact of the virus on the global economy and oil demand.
Another source said: “The extension is very possible until June, and there is still a preferred option about extending the agreement until the end of 2020, and deepening the reduction is possible if it is needed.”
Although Moscow was keen to get out of the cuts earlier, it would remain the same if oil prices continued to trade below $60 a barrel, according to Reuters.
OPEC cut oil supplies to support prices, and in December 2019 it agreed to delay production of 1.7 million barrels per day until the end of March. OPEC expects to decline its share in the global market further this year, with production booming in non-OPEC countries, including the United States, Brazil, Canada and Australia.
when asked about the possibility of reducing production, Saudi Energy Minister Prince Abdulaziz bin Salman confirmed before days that all options are open when OPEC and Russia meet in Vienna in early March 2020.