By Adedapo Adesanya
Major oil futures prices are positive ahead of today’s meeting among nations that make up the Organisation of the Petroleum Exporting Countries (OPEC) to discuss a possible end to the oil price war between Saudi Arabia and Russia that has tanked oil prices since last month.
The emergency meeting, which will be held via videoconference, could bring about the largest oil production cut deal ever made in history as OPEC states and its allies in addition to Brazil, Norway, and Canada, could cut oil production by 10 million barrels per day.
On Thursday morning, Brent crude, the global benchmark, rose $1.19 or 3.62 percent to trade at $34.03 per barrel, while the West Texas Intermediate (WTI) crude garnered $1.16 equivalent to 4.62 percent to sell at $26.24 per barrel.
The market was met with fresh optimism as one of the member states of the cartel, Algeria, which also holds the mantle of the organisation’s presidency said the meeting was going to be “undoubtedly fruitful”.
The OPEC President and Algerian Energy Minister, Mr Mohamed Arkab, on Wednesday said, “The meeting will undoubtedly be fruitful in order to rebalance the market through measures we will take tomorrow.”
Saudi Arabia and Russia, which are the major players in the proposed deal, are expected to make or break the chances of a production cut agreement. Failure to reach a compromise last month was very brutal to the oil market.
Both producers contribute more than 22 million barrels per day and a 10 million barrels per day cut being put forward might not prove much in the long term, according to analysts, due to the drop in the demand for oil lately as a result of coronavirus.
Global demand for oil has been significantly affected by the coronavirus outbreak which triggered travel restrictions and temporary business closure across the globe and an oil price war between Russia and Saudi Arabia further made matters worse.
However, with Russia now struggling to find buyers for its crude and the possibility of prices dropping in unfavourable levels, the country may need to quickly agree to an output ceiling.
Russian news agencies reported on Wednesday that the country could cut up to 1.6 million barrels per day of supply.
The meeting is scheduled to hold by 3 pm Nigerian time (GMT +1).
Dipo Olowookere