Adedapo Adesanya
By Adedapo Adesanya
Oil prices were mixed on Thursday as the Organisation of the Petroleum Exporting Countries (OPEC) recommended a provisional cut in oil output of 600,000 barrels per day (bpd) in response to the coronavirus which has killed more than 500 people and caused oil prices to slide.
After the OPEC and non-OPEC’s Joint Technical Committee (JTC) meeting in Vienna, the recommendation awaits Russia’s final position on the proposal, but the country is not willing to extend further cuts.
On Thursday night, the West Texas Intermediate (WTI) crude went up by 38 cents or 0.75 percent to trade at $51.33 per barrel, while the Brent crude, on the other hand, went down by 35 cents or 0.63 percent to trade at $54.93 per barrel.
The recommendations made by technical panel is not final yet as the decision will be taken by OPEC ministers when they meet next week to discuss on the new proposed cut which would be 0.6 percent of current global supply.
As at Thursday evening, the cartel has not decided whether to bring forward their upcoming policy meeting to February from March 5-6.
Although the current cut is expected to run till the end of March, market analysts say that the new cut, which would round up cuts to 2.3 million barrels per day, will likely run till the end of June 2020.
The decision of taking deeper cuts was kicked against by Russia as it suggested an extension of current cuts rather than new cuts but Saudi Arabia and other OPEC members are worried that the continued spread of the virus could hit oil demand and prices further.
Russian Energy Minister, Mr Alexander Novak, said on the first day of the joint technical committee meeting that he was not sure whether it was time to deepen output cuts, but Saudi Arabia and Iraq, which are the largest producers in the OPEC alliance, stated that they will be willing to take any decision that helps keep prices up.
Oil prices have lost more than $10 since the beginning of the year, below benchmarks set by most oil dependent countries in their budgets, and to avoid more unforeseen circumstances, this might be a two pronged approach to reduce supply and also stabilise prices.
