Russia Resists Further Oil Cuts as OPEC+ Holds Emergency Meeting

For three days now, officials from the world’s biggest oil-producing countries are locked in talks as the leader of OPEC, Saudi Arabia, and Russia remained split over their response to China’s coronavirus, CNA reports.

Delegates gathered again in Vienna on Thursday after two days of meetings weren’t enough to shift Russian resistance to deeper production cuts. Saudi Arabia, engaging in capital-to-capital diplomacy, has been pushing for the cartel to reduce output as the deadly epidemic squeezes China’s economy and its demand for oil.

The price of crude has plunged in recent weeks on expectations that the epidemic will make a sizable dent in global energy consumption as China curbs imports of crude and liquefied natural gas. As talks between the Organization of Petroleum Exporting Countries and its allies dragged on in the Austrian capital, traders voiced optimism that the cartel will eventually summon ministers for an emergency meeting that would take action to avert a surplus. Crude futures rose on Thursday for a second day.

“An emergency meeting is clearly on the table and I would not rule it out,” Bob McNally of Washington-based Rapidan Energy Advisors LLC told Bloomberg. “But it’s an uphill battle for proponents, especially given Russia’s stout opposition and crude’s relief rally.”

Russia would be willing to extend the current production cuts, which were agreed in December and due to expire in March, but doesn’t want additional measures, according to one delegate. It was the country’s reluctance that pushed the meeting of OPEC+ experts into the third day, he said.

The Kremlin’s budget is more resilient to low oil prices than Saudi Arabia’s, and the standoff between the two producers has become a feature of negotiations, albeit one that typically ends in compromise.

Russian President Vladimir Putin spoke to Saudi King Salman bin Abdulaziz by phone earlier this week and doesn’t currently have plans for another call, Kremlin spokesman Dmitry Peskov told reporters on a conference call on Thursday.

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