Saudis seek bigger oil cut as Coronavirus slashes demand
Saudi Arabia is pushing for a far more substantial cut in oil production when OPEC and its allies meet next week, as global energy producers scramble to respond to the Coronavirus outbreak that has crippled oil demand.
The Kingdom is asking cartel members as well as partner Russia to sign up to a collective production cut of an additional 1m barrels a day, according to a report Friday.
The proposal is far higher that had been previously suggested and comes amidst a 10 per cent collapse in the price of oil in the last one week alone. Brent the internationally traded crude benchmark is heading towards $50 a barrel Friday, piling pressure on oil dependent economies like Nigeria.
It is understood that the Saudi plan was discussed during a visit by OPEC Secretary General Mohammad Barkindo to Riyadh last week and it is meant to show that the cartel can respond meaningfully to the sharp reduction in oil demand created by a virus that has paralysed global supply chains and stifled international travel.
Under the proposal, Saudi Arabia will account for the bulk of the new 1m barrels a day cut while Kuwait, the UAE and Russia would be asked to split the rest. This could save Nigeria from suffering a double blow from falling prices and a cut in quota.
The deal is yet to find the full backing it needs and Russia is still balking at the idea of committing to a substantial cut when the full extent of the Coronavirus impact has yet to be known.
