GUIDANCE

The Coronavirus Crisis Will Prompt Only Modest Cuts From OPEC+

undefined and Director, Global Energy and Middle East
Greg Priddy
Director, Global Energy and Middle East, Stratfor

Feb 28, 2020 | 11:00 GMT

The OPEC headquarters in Vienna.

Russia's cautious approach to oil production cuts will triumph over Saudi desires for deeper trims at the OPEC ministers meet late next week at the cartel's headquarters in Vienna.

(SODEL VLADYSLAV/Shutterstock)

Highlights

  • OPEC+ will probably decide on a distributed headline cut of around 600,000 barrels per day at the March ministerial meeting in Vienna.
  • The trend toward a more lengthy demand slump from the effects of the coronavirus outbreak will overcome Russian hesitancy to cut, but the Kremlin will push to limit the volume.
  • While benchmark prices in the $50s, or even briefly in the upper $40s, will not cause Russia acute pain, it will further limit U.S. production growth in the second half of the year.

OPEC+ is likely to agree on a modest cut in oil production at the regularly scheduled meeting of OPEC ministers on March 5-6 in Vienna. The ministers most likely will simply agree to adopt the recommendation of the cartel's technical committee earlier this month for an evenly distributed trim of 600,000 barrels per day. At that time, Russia turned down a Saudi suggestion that an emergency ministerial meeting be scheduled, preferring instead to monitor the spread of the COVID-19 outbreak to get a better gauge of its expected impact on demand....

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