NOPEC

6 March 2020 By George Hay Follow @gfhay

Moscow has rejected the cartel’s pleas for a supply cut to ease a virus-linked demand slump. Given the scale of the oil market imbalance, an inadequate deal was the best that could have been hoped for. But OPEC’s efforts to force the issue look like leaving everyone worse off.

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The Organization of the Petroleum Exporting Countries on March 6 failed to reach agreement with Russia on fresh supply cuts after Moscow argued it was too early to predict the impact of a coronavirus outbreak on global energy demand, sources told Reuters.

Brent crude futures were down 7% at $46.5 a barrel as of 1530 GMT. West Texas Intermediate was down 7% to $42.2 a barrel.

An existing deal for output cuts will now expire in March, allowing OPEC members and non-OPEC producers in theory to pump at will in an already oversupplied market, sources told Reuters.

OPEC ministers said on March 5 they had backed an additional 1.5 million barrels per day of production cuts until the end of 2020, equal to around 1.5% of global demand, a much bigger and more extended move than expected.

The Kremlin said on March 6 President Vladimir Putin had no plans to talk to the Saudi leadership, an announcement that dashed hopes that a deal could be salvaged at the very top.

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