Opec+ countries plan to discuss a "new, substantial" cut in production this week and appear to have already reached an agreement to extend current quotas, Algerian energy minister Mohamed Arkab said today.
Opec needs to take "swift" action to tackle the "worrying" decline in oil markets resulting from the spread of the coronavirus, said Arkab, who holds the group's rotating presidency. Some non-Opec members requested more time to assess the impact of the coronavirus on the oil market before the Opec+ meeting on 6 March, he said.
The Joint Technical Committee (JTC) that advises Opec+ recommended last month that the group cut a further 600,000 b/d from their combined output in the second quarter, and recommended extending current quotas to the end of the year, to counter the effects of the coronavirus outbreak on global oil demand.
It is clear the group is considering a deeper reduction as the spread of virus since the February recommendation means cuts will be seen as too small to prevent inventory builds, Medley Global Advisors director Mohammad Darwazah said.
The coronavirus has roiled global markets. Yesterday the OECD warned that under its worst-case scenario the outbreak could cut global growth by half this year. Today, the US Federal Reserve cut its benchmark interest rate by 0.5pc, citing risks to economic activity, and the G7 group of major economies said they will intervene to support their economies should that risk arise.
The JTC is currently meeting in Vienna. Russia is still evaluating the JTC recommendation, but has not received any proposal for a 1mn b/d reduction in the second quarter, energy minister Alexander Novak said yesterday.
