Russia unaware of proposal for further cuts as OPEC plans meeting

Russia has not received a proposal from OPEC to jointly cut the oil production by one million barrels per day, Alexander Novak, Russia’s energy minister, said on Monday, a development which could throw a wrench into plans to stem further decline of oil prices.

Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC) and its alliance are planning to hold their ministerial meeting as scheduled this week, pending a final decision Monday with a teleconference under consideration, sources told S&P Global Platts.

A source told the energy intelligence firm that the group is proceeding with plans and maintaining contact with the Austrian authorities. In recent times, OPEC meetings with its non-OPEC members have been held in Vienna, Austria.

Delegations from the 23 countries that are members of the OPEC+ alliance are due to jet into Vienna to attend the meeting scheduled for March 5-6. OPEC is consulting with the World Health Organisation over whether the meeting would be a threat to public health if it goes ahead, sources said. Representatives for the Austrian government say they are not participating in the decision-making process for the OPEC+ meeting.

“No general restrictions apply on [Austria’s] side. If the meeting is going ahead, however, can only be confirmed by OPEC,” a spokesperson for the Foreign Ministry said.

A decision to delay the meeting would leave the future of the OPEC+ 1.7 million b/d production cut accord with Russia and other allies up in the air.

The deal expires at the end of the month, and with oil prices cratering due to the expected economic fallout from the coronavirus, OPEC kingpin Saudi Arabia has been pressing the producer coalition to deepen the cuts by some 1 million b/d through at least June, according to sources.

Oil exporting countries like Nigeria are understandably worried over the decline in oil prices. At the height of the quarantines in China, oil demand in the country plummeted at least 25 percent from where they would normally have been. That alone was enough to send oil prices into a tailspin, knocking them more than 20 percent below their January highs and they could even drop to $50 a barrel or less.

Russian President Vladimir Putin said Sunday he backed continued oil market cooperation with the alliance but added that the current oil price was acceptable for his country’s budgetary needs, indicating some potential hard bargaining at the meeting this week.

The oil market has been in a tailspin, with prices settling Friday at 14-month lows. At 2:25 pm Singapore time (0625 GMT), the May ICE Brent crude futures, the new front-month, rose $1.75/b (3.52 percent) from Friday’s settle at $51.42/b, while the NYMEX April light sweet crude contract rose $1.38/b (3.08 percent) at $46.14/b. The WHO upgraded its risk assessment of the epidemic to “very high”, with more than 85,000 cases reported worldwide and a death toll of more than 2,900.

Longtime OPEC watchers said any decision to delay the meeting this week would mark the first time the 60-year-old producer group scrapped a summit due to external events. On Sunday, the major IHS CERAWeek energy conference was cancelled, which had been scheduled for March 9-13 in Houston.

ISAAC ANYAOGU with agency report