Vienna: The OPEC group of oil producers will recommend a production cut of 1.5 million barrels per day to its allies, Iran's Energy Minister said Thursday, as it seeks counter the slump in demand caused by the COVID-19 outbreak.
"We decided... to recommend to the non-OPEC meeting tomorrow 1.5 million barrels of new cut for the second quarter of 2020," Bijan Namdar Zanganeh told reporters after an extraordinary meeting of OPEC ministers at the group's headquarters in Vienna. The proposal, however, assumes that non-member allies like major producer Russia, who will take up the proposal Friday, will agree to the cuts.
OPEC issued a statement saying that member countries would cut 1 million barrels per day under the proposal, while non-members would share a further cut of 500,000 barrels per day. Saudi Oil Minister Prince Abdulaziz bin Salman, asked as he left the meeting if Russia was on board, said: "We'll see tomorrow."
Bjarne Schieldrop, chief commodities analyst at SEB bank, said that " the main expectation is... that Russia will join in with additional cuts."
He believes that the OPEC countries and their allies will make the necessary cuts to keep the oil price from dropping to USD 40 or USD 30 per barrel "but not deep enough to drive it up from its current level of about USD 50 per barrel in the next few months."
The meeting of oil ministers from OPEC's 14 countries was visibly affected by the coronavirus as journalists were barred from the headquarters building.
They instead set up outside the venue and sought to briefly interview officials arriving for the meeting. Health officials were also seen using infrared thermometers to check entering delegates.
Oil-producing countries are trying to shore up prices amid falling demand. Since the new coronavirus outbreak began in China last month, air travel to the country the world's second-largest economy has all but stopped, sapping demand for aviation fuel.