Opec and Russia will meet today to try to negotiate cuts to production cuts in a bid to address a drop in oil prices during the coronavirus crisis.
Demand for fuel has plunged as much as 30 per cent after lockdowns and travel restrictions forced airlines to ground their plans and car usage slumped amid the coronavirus pandemic.
Today’s meeting between Opec+ – Saudi Arabia and Middle East countries’ wider alliance with Russia – will be held by video conference. And tomorrow it will be followed by a meeting of G20 energy ministers.
Oil prices have fallen below the cost of production for many producers since Russia and Saudi Arabia’s oil price war began.
Russia refused to countenance further heavy production cuts to shore up oil prices amid the coronavirus blow to global travel in early March.
That led Saudi Arabia to flood the market with cheap oil in a bid to hurt its rival, shattering the Opec+ alliance.
Russia and Saudi Arabia have since indicated that their agreement to cutting production would be dependent on the US and others joining in.
President Donald Trump last week claimed he had brokered a deal with Saudi Arabia, the leader of Opec, and Russia which would result in a reduction in oil output of 10 to 15 per cent.
However, the US is reportedly reluctant to cut its domestic supply. The US department for energy has said that oil output was falling already without any government action.
Asked ahead of the meeting if the natural decline in US oil output could count as a reduction, Kremlin spokesman Dmitry Peskov said yesterday: “These are absolutely different reductions.”
“You are comparing overall decline in demand with cuts aimed at stabilising global markets. These are different concepts and they could not be equalled,” Peskov said.
Moscow and Riyadh, who fell out following a meeting to cut output in March, will need to agree what output level to use as a baseline for calculating the oil output cuts.