Big OPEC+ oil output cuts depend on U.S., others joining: sources

Saudi Arabia, Russia and allied oil producers will only agree to deep cuts to their crude output at talks this week if the United States and several others join in with curbs to help prop up prices that have been hammered by the coronavirus crisis.

Global oil demand has dropped by as much as 30%, or about 30 million barrels per day (bpd), as measures to prevent the virus spreading have slashed demand for jet fuel, gasoline and diesel. France reported on Tuesday a 80% drop in its petrol use.

On top of sliding demand, Saudi Arabia has been flooding the market with extra crude after the collapse last month of a three-year-old deal with Russia on limiting supplies between OPEC and their allies, a group known as OPEC+.

OPEC+ is due to hold a video conference on Thursday at 1400 GMT, after U.S. President Donald Trump said last week he had brokered a deal between Riyadh and Moscow on cuts amounting to an unprecedented 10 million to 15 million bpd, or about 10% to 15% of global supplies. Nothing has yet been formalised.

An OPEC source told Reuters on Tuesday the size of any OPEC+ curbs depended on volumes other producers such as the United States, Canada and Brazil were willing to cut.

Other OPEC+ sources have echoed this, saying it hinged on action by the United States, where costly shale oil production has surged with the help of OPEC+ action since 2016 to support prices. “Without the U.S., no deal,” said one OPEC+ source.

The United States has yet to commit to any cut, while Trump has said U.S. oil production had already fallen.

Riyadh and Moscow blamed each other for the collapse of the previous OPEC+ deal last month and have since then waged a war for market share, sending oil prices to their lowest in almost two decades. Benchmark Brent LCOc1 was trading at about $33 a barrel on Tuesday, about half its level at the end of 2019.

Saudi Arabia, with by far the world’s biggest reserve of extra capacity and some of the lowest production costs, said it had raised crude output to 12.3 million barrels per day (bpd) on April 1 and planned to export more than 10 million bpd.

Big OPEC+ oil output cuts depend on U.S., others joining: sources, Reuters, Apr 7