OPEC’s waning influence laid bare as coronavirus outbreak hammers oil prices, analysts say

OPEC’s battle to support oil prices as China’s coronavirus spreads internationally shows the producer group is struggling to wield the same influence over global crude markets, energy analysts have told CNBC. It comes amid speculation that OPEC and non-OPEC producers, sometimes referred to as OPEC+, could extend production cuts if the intensifying outbreak of the coronavirus hampers oil demand growth.

International benchmark Brent crude traded at $59.85 a barrel Wednesday afternoon, up over 0.6%, while U.S. West Texas Intermediate (WTI) stood at $53.59, around 0.2% higher.Both crude benchmarks have pared some of their recent losses, after slumping to multi-month lows earlier in the week.

“Will deeper OPEC supply curbs provide the panacea for the current oil market malaise? Probably not,” Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note published Wednesday. China’s National Health Commission confirmed Wednesday that the coronavirus had infected 5,974 people, with 132 deaths and 103 cured.

The virus, which was first discovered in the Chinese city of Wuhan, has spread to other major cities such as Beijing, Shanghai, Macao and Hong Kong. OPEC President Mohamed Arkab has previously said he believes the virus outbreak will have little impact on the global oil market in the near-term, but suggested the Middle East-dominated producer group is ready to act to any further developments. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman has also insisted that OPEC+ has the capability to steady the oil market if necessary. The group has been limiting supply to prop up crude futures and recently increased its agreed output reduction by 500,000 barrels per day (b/d) to 1.7 million b/d through March.