OPEC and Russia have postponed a meeting planned for Monday until later next week, OPEC sources said on Saturday, as a row intensified between Moscow and Saudi Arabia over who is to blame for plunging oil prices.
The meeting’s delay came despite pressure from U.S. President Donald Trump for the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, to urgently stabilize global oil markets.
OPEC+ is working on an unprecedented oil output curb equal to about 10% of world supply, or 10 million barrels per day, in what member states expect to be a global effort that will include the United States.
Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman Al-Saud and Russia’s Energy Minister Novak are seen at the beginning of a meeting in Vienna
Oil prices hit an 18-year low on March 30 due to sliding demand caused by government lockdowns to contain the coronavirus outbreak, and the failure of OPEC and other producers led by Russia to extend an earlier deal on output curbs that expired on March 31.
Washington, however, has yet to make a commitment to join the effort and Russian President Vladimir Putin on Friday put the blame for the collapse in prices on Saudi Arabia — prompting a firm response from Riyadh on Saturday.
“The Russian Minister of Energy was the first to declare to the media that all the participating countries are absolved of their commitments starting from the first of April, leading to the decision that the countries have taken to raise their production,” Saudi Energy Minister Prince Abdulaziz bin Salman said in a statement carried by state news agency SPA.
Putin, speaking during a video conference with government officials and heads of Russian major oil producers on Friday, said the first reason for the fall in prices was the impact of the coronavirus on demand.
“The second reason behind the collapse of prices is the withdrawal of our partners from Saudi Arabia from the OPEC+ deal, their production increase and information, which came out at the same time, about the readiness of our partners to even provide a discount for oil,” Putin said.
Three OPEC sources, who asked not be identified, said the emergency virtual meeting planned for Monday would likely be postponed until April 8 or 9 to allow more time for negotiations. The oil and gas industry plays a vital role in determining the economy of a country. Here are the world’s ten largest oil producers and their share of the total oil production in 2018, as compiled by the U.S. Energy Information Administration.
Sources later downplayed the Saudi-Russia row, saying the atmosphere was still positive, although there is no draft deal yet or agreement on details such as a reference level from which to make the supply cuts.The first problem is that we have to cut from the current production level now, not to go back to the one before the crisis,” one of the OPEC sources said.
“The second issue is the Americans, they have to play a part.” Oil recovered from the lows of $20 per barrel this week with Brent settling at $34.11 on Friday, still far below the $66 closing level at the end of 2019.
Prices had their biggest one-day gain ever on Thursday when Trump said he expected Russia and Saudi Arabia to announce a major production cut. The United States is not part of OPEC+ and the idea of Washington curbing production has long been seen as impossible, not least because of U.S. antitrust laws.
Still, the oil crash has spurred regulators in Texas, the heart of U.S. oil production, to consider regulating output for the first time in nearly 50 years. But U.S. Energy Secretary Dan Brouillette, in a call with oil industry leaders on Friday, did not mention the possibility of U.S. production cuts, a source who listened to the call said.
Russian Energy Minister Alexander Novak told Russian state media he understood that the United States has legal restrictions on output cuts, but it should still be flexible. Officials from other oil producers that do not belong to OPEC+ have indicated willingness to help. Canada’s Alberta province, home to the world’s third-largest oil reserves, is open to joining any potential global pact
The International Energy Agency warned on Friday that a cut of 10 million bpd would not be enough to counter the huge fall in oil demand. Even with such a cut, inventories would increase by 15 million bpd in the second quarter.