OPEC agrees on massive oil supply cut to offset virus impact

OPEC has agreed to impose a deeper round of production cuts in order to support oil prices, paving the way for crunch talks with non-OPEC leader Russia, who still has to agree to the plan. The 14-member group, led by Saudi Arabia, decided on Thursday to cut production by 1.5 million barrels per day (bpd) through the second quarter of the year.

OPEC added the group would review this policy at its next meeting on June 9. The proposed cuts, which were at the top end of analyst expectations, are believed to be conditional on approval from Russia. It means energy market participants will now turn their attention to a meeting of both OPEC and non-OPEC members, sometimes referred to as OPEC+, on Friday.

Ahead of the OPEC+ meeting, analysts were concerned a long-standing energy alliance between Saudi Arabia and Russia would come under intense scrutiny. That’s because Russia’s appetite for deeper production cuts has been far from certain in recent weeks. Moscow is reportedly in favor of an extension to the current level of cuts rather than a further reduction.

Oil prices reversed early gains to move lower on Thursday. International benchmark Brent crude shed 34 cents, or 0.66%, to trade at $50.79 per barrel, while U.S. West Texas Intermediate stood at $46.59, around 0.4% lower. Speaking shortly after the OPEC meeting on Thursday, Iranian Oil Minister Bijan Zanganeh said that Tehran would remain exempt from the proposed reduction.

OPEC agrees on massive oil supply cut to offset virus impact; awaits Russia’s approval, CNBC, Mar 5