Kuwait expects OPEC and its non-OPEC partners led by Russia to reach an agreement this week on how to react to the oil price and demand slump due to the coronavirus outbreak, Kuwaiti Oil Minister Khaled al-Fadhel told state news agency KUNA on Tuesday.
The OPEC+ group will hold “marathon” meetings in Vienna this week, which Kuwait expects to achieve results in a deal to restore stability on the oil market, the minister told KUNA.
OPEC and its allies are holding a technical meeting before full ministerial OPEC and OPEC+ meetings on Thursday and Friday to decide how to address the depressed oil demand due to the coronavirus outbreak.
The market started pricing in a significant cut this week, with oil prices rallying on Monday and early on Tuesday, on hopes that the OPEC+ coalition will come up with a unified position about deeper cuts in Q2, despite Russia’s reluctance to sign up for more cuts.
Russia continues to refuse to announce its position regarding deeper cuts by OPEC+, but over the weekend Russian President Vladimir Putin suggested that Moscow will continue to cooperate with OPEC, even though it sees current oil prices as “acceptable.”
The OPEC+ group’s joint technical committee (JTC) issued a proposal early last month that the producers extend the cuts as-is until the end of 2020 and deepen those cuts in Q2 in response to the fact that the coronavirus “has had a negative impact on oil demand and oil markets.”
Last week, OPEC’s leader Saudi Arabia was said to be asking members of the OPEC+ group to consider an additional collective cut of 1 million bpd—that is 400,000 bpd higher than the initial proposal of the panel.
According to reports, some OPEC members are leaning toward a 1-million-bpd cut, especially after oil prices slumped amid heavy selling last week.
“OPEC+ will need to surprise the market with the level of cuts if they want any chance of pushing prices higher,” ING strategists Warren Patterson and Wenyu Yao said on Tuesday.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.