OPEC to postpone production cuts to June

The Organisation of Petroleum Exporting Countries (OPEC) have decided to postpone the ongoing production cuts to June and could discuss deeper cuts if the need arise, as oil prices continue to drop on fears that the coronavirus outbreak in China will affect oil demand. 

Sources said the cartel could also consider rolling over the cuts till the end of the year or even deepen the cuts if the demand destruction turns out to be significant. 

Analysts said Russia which has always been OPEC’s reluctant partner has  agreed to roll over the cuts at each OPEC+ meeting at the very last moment and which is said to want out after March is reportedly considering staying in the pact if oil prices continue to be below $60 a barrel.

The Daily Times gathered that oil prices have dropped by around 10 per cent since the first reports of the deadly coronavirus came out of China last week.

Oil prices on Tuesday were on track for a sixth consecutive day of losses, with WTI crude  trading below $53 and Brent crude hanging to  $58 a barrel handle.

Daily Times had earlier reported that, OPEC’s leader Saudi Arabia had tried to jawbone the market higher, and the United Arab Emirates (UAE) chimed in to downplay what it called a market overreaction over fears that the virus will erode oil demand in China, the world’s largest oil importer and main oil demand growth driver.

While the leading OPEC producers downplayed fears of crippled demand growth in an attempt to calm the oil market, the cartel was said to be considering extending the production cuts or even deepening them to stave off excessive price slides due to the coronavirus outbreak in China. 

Analysts reported that OPEC and its Russia-led non-OPEC partners will be meeting in early March to decide how to proceed with the cuts, as OPEC members were already said to be discussing a potential extension of the oil production cuts through the end of 2020 due to the bearish outlook on oil demand growth.