OPEC raises stakes with Russia, seeks biggest oil cut since 2008 crisis
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard
SATURDAY, MAY 28, 2022
SATURDAY, MAY 28, 2022
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
OPEC raises stakes with Russia, seeks biggest oil cut since 2008 crisis

Global Economy

Reuters
06 March, 2020, 11:15 am
Last modified: 06 March, 2020, 11:18 am

Related News

  • Ukrainian negotiator says any agreement with Russia 'isn't worth a broken penny'
  • How a Russian billionaire shielded assets from European sanctions
  • Russian lawmakers in hot water for urging Putin to end Ukraine conflict
  • Ukraine says troops may retreat from eastern region as Russia advances
  • US Treasury pushes Russia towards default: What next?

OPEC raises stakes with Russia, seeks biggest oil cut since 2008 crisis

OPEC+ already has a deal in place for 2.1 million bpd of cuts

Reuters
06 March, 2020, 11:15 am
Last modified: 06 March, 2020, 11:18 am
The logo of the Organization of the Petroleum Exporting Countries (OPEC) on a flag at the oil producer group's headquarters in Vienna, Austria, December 7, 2018. Photo:Reuters
The logo of the Organization of the Petroleum Exporting Countries (OPEC) on a flag at the oil producer group's headquarters in Vienna, Austria, December 7, 2018. Photo:Reuters

OPEC pushed on Thursday for a bigger-than-expected oil output cut to support prices that have been hit by the coronavirus outbreak, effectively presenting its non-OPEC partners with an ultimatum to back the move or face a price collapse.

OPEC's proposal to curb supplies by an extra 1.5 million barrels per day (bpd) until the end of 2020 was a surprise, given the group was expected to propose cuts of 1 million bpd and, hours earlier on Thursday, had said curbs should be limited to the second quarter.

But an unusual informal meeting of OPEC ministers in a Vienna hotel on Thursday evening announced that the group now wanted the cut - already the biggest since the 2008 financial crisis - to run until the end of year.

Russia and Kazakhstan, both members of the broader grouping known as OPEC+ which meets in Vienna on Friday, said they had not yet agreed to a deeper cut, raising the risk of a collapse in cooperation that has propped up crude prices since 2016.

OPEC+ already has a deal in place for 2.1 million bpd of cuts.

OPEC said after Thursday's formal ministerial meeting that the market faced an "unprecedented situation" as efforts to stop the coronavirus spreading has driven down demand for oil by dampening economic activity around the world.

Riyadh, OPEC's biggest producer, has been pushing for a significant cut to lift oil prices that have tumbled 20% since the start of year. But it has struggled to win over Moscow.

Russian Finance Minister Anton Siluanov said on Thursday he was ready for a drop in oil prices if there was no deal. Kazakh Energy Minister Nurlan Nogayev, another non-OPEC producer, said talks were only focusing on extending existing curbs to June.

"Moscow perhaps is underestimating that Saudi Arabia may be ready to walk away if it doesn't get a positive answer," said Amrita Sen, co-founder of Energy Aspects think-tank.

'IN THIS TOGETHER'
Russia has been hesitant in previous negotiations and has then signed up to deals at the last minute. But OPEC sources have said negotiations with Moscow this time have been tougher.

Two OPEC sources said on Thursday that, if Russia failed to sign up, there was a risk Saudi Arabia would insist on scrapping OPEC production limits altogether.

After its formal ministerial meeting, OPEC ministers had said non-OPEC states were expected to contribute 500,000 bpd to the overall extra cut.

Suhail al-Mazroui, energy minister of the United Arab Emirates, said OPEC did not want to carry the burden of cuts alone and non-OPEC had to help. "We are all in this together. So it's not going to be us making a decision alone," he said.

Saudi Arabia, the world's top oil exporter, is already cutting well beyond its quota under the existing pact, reducing its output by about 10%. Russia, with bigger total production, has reduced its output by a fraction of Riyadh's cut.

Gary Ross, founder of Black Gold Investors, said a worst case scenario in which Saudi Arabia returned to full production would send oil prices down to $25 to $30 a barrel.

That would take prices to a level that would be painful for OPEC states, already struggling with prices at around $50, but also for Russia, which has said it can balance its books at $40.

"OPEC+ have little choice but to cut output substantially given the virus related demand losses," Ross said, adding that he expected Russia "will join because it is overwhelmingly in their economic interests."

Brent oil prices LCOc1 initially rose 0.6% on news of OPEC's plan to cut by 1.5 million bpd, but then gave up most of those gains when Russia and others suggested a deal was not in the bag.

The proposed OPEC cut of 1.5 million bpd, if approved, would bring the group's overall output reduction to 3.6 million bpd or about 3.6% of global supplies.

The last time OPEC reduced supplies on such a scale was in 2008 when it cut production by a total of 4.2 million bpd to address slower demand because of the global financial crisis.

OPEC hold its next ministerial meeting on June 9.

Top News

OPEC / OPEC+ / Russia

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Mahbub Ahmed. Illustration: TBS
    Budget should focus more on inflation control than on growth
  • Govt borrows 51% of target thru’ savings certificate sales in 9 months
    Govt borrows 51% of target thru’ savings certificate sales in 9 months
  • Protecting Hatirjheel would require striking a balance between the preservation of its natural beauty, fisheries and ease of communication. PHOTO: Mumit M
    Can the Hatirjheel water taxi service be stopped?

MOST VIEWED

  • Photo: Collected
    Gangs, inflation and political crisis bring Haiti economy to brink
  • Zhang Tieliang 76, sifts through dunes of low-grade coal near a coal mine in Ruzhou, Henan province, China November 4, 2021. Photo :Reuters
    India seen facing wider coal shortages, worsening power outage risks
  • Smoke billows from a chimney at a combined-cycle gas turbine power plant in Drogenbos, near Brussels, Belgium January 30, 2019. REUTERS/Yves Herman
    High gas prices, energy security fears impede decarbonisation push
  • U.S. one dollar banknotes are seen in this illustration taken February 8, 2021. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo
    US Treasury pushes Russia towards default: What next?
  • The OPEC logo pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria, September 28, 2016. REUTERS/Ramzi Boudina
    G7 calls on OPEC to play key role to ease global energy supplies
  • A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson
    Oil on track for weekly rise on global supply concerns

Related News

  • Ukrainian negotiator says any agreement with Russia 'isn't worth a broken penny'
  • How a Russian billionaire shielded assets from European sanctions
  • Russian lawmakers in hot water for urging Putin to end Ukraine conflict
  • Ukraine says troops may retreat from eastern region as Russia advances
  • US Treasury pushes Russia towards default: What next?

Features

A male Baya Weaver beating wings. Photo: Enam Ul Haque

Baya Weavers weave: ‘Must be witnessed to be fully credited’

3h | Panorama
Starlink is ideal in rural or remote locations where internet access has been unreliable or completely unavailable. Photo: SpaceX

Time for a reality check: How viable is Starlink in Bangladesh?

4h | Panorama
First Look: Nissan Magnite 1.0L Turbo

First Look: Nissan Magnite 1.0L Turbo

4h | Wheels
Car myths that really need to go away

Car myths that really need to go away

4h | Wheels

More Videos from TBS

Foods that will prevent future famines

Foods that will prevent future famines

2h | Videos
Sustainable initiative of Pcycle creating employment

Sustainable initiative of Pcycle creating employment

3h | Videos
Photo: TBS

Education at Tk1 changing lives, making dreams come true

4h | Videos
Photo: TBS

An electricity bill that connects Brahmanbaria with Tripura

4h | Videos

Most Read

1
Bangladesh at risk of losing ownership of Banglar Samriddhi
Bangladesh

Bangladesh at risk of losing ownership of Banglar Samriddhi

2
Corporates go cashless…tax cut on cards
NBR

Corporates go cashless…tax cut on cards

3
Photo: Courtesy
Panorama

Misfit Technologies: A Singaporean startup rooted firmly in Bangladesh

4
Tk100 for bike, Tk2,400 for bus to cross Padma Bridge
Bangladesh

Tk100 for bike, Tk2,400 for bus to cross Padma Bridge

5
British International Investment (BII) CEO Nick O’Donohoe. Illustration: TBS
Economy

BII to invest $450m in Bangladesh in 5 years

6
Representational image. Picture: Pixabay
Economy

Govt raises regulatory duty to discourage imports of 130 products

The Business Standard
Top
  • Home
  • Entertainment
  • Sports
  • About Us
  • Bangladesh
  • International
  • Privacy Policy
  • Comment Policy
  • Contact Us
  • Economy
  • Sitemap
  • RSS

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net

Copyright © 2022 THE BUSINESS STANDARD All rights reserved. Technical Partner: RSI Lab