Mar 2, 2020 - Energy & Environment

Coronavirus looms over OPEC+ meeting

Illustration: Sarah Grillo/Axios

OPEC and Russia are slated to meet in Vienna this week to decide whether to extend and deepen their production-cutting agreement as the novel coronavirus eats into global oil demand.

Why it matters: The economic slowdown from the spread of the virus has pushed oil prices down to their lowest levels in over a year — creating new tests for the 3-year-old OPEC+ alliance between the cartel, Russia and allied producers.

What they're saying: Via S&P Global Platts, Russian President Vladimir Putin said yesterday that "for the Russian budget, for our economy, current oil prices are acceptable."

  • But per their piece and others, Putin also emphasized the need for "action" with their foreign partners.
  • The current supply-limiting deal expires at the end of this month.

What's next: Bloomberg took the pulse of analysts and found a widespread expectation that the March 5–6 meeting will yield new cuts.

  • "All but two of 29 analysts, traders and brokers in a global poll predicted that the Organization of Petroleum Exporting Countries and its allies will announce new curbs, with an average expectation of 750,000 barrels a day," they report.

But, but, but: The price plunge is hitting the industry in the U.S. too as shale producers, already struggling to make money, feel the pinch. The Wall Street Journal has more.

Go deeper

New aftershocks from Saudi-Russia oil rupture

Photo: Alexey Nikolskey/Sputnik/AFP via Getty Images

Saudi Arabia plans to boost oil output and sharply cut prices, signaling the first response to Friday's collapse of OPEC's production-cutting pact with Russia and allied producers, according to multiple reports.

Why it matters: The unraveling of the OPEC+ agreement, at least for now, and declining oil demand due to the novel coronavirus' economic toll are upending global oil markets and geopolitics.

OPEC-Russia oil price war escalates as Saudi Aramco announces supply increase

Data: Money.net; Chart: Andrew Witherspoon/Axios

The new oil price war escalated Tuesday as Saudi state oil giant Aramco announced, per reports in Reuters and elsewhere, that it plans to supply the market with 12.3 million barrels per day starting next month.

Why it matters: The increase underscores how the lunge for market share with the collapse of the OPEC+ agreement is going to create financial pain and problems for producers and governments worldwide.

White House weighing aid for oil producers amid price collapse

Photo: Brendan Smialowski/AFP via Getty Images

The Trump administration is "strongly considering" federal assistance for U.S. oil producers facing distress due to the steep decline in prices, the Washington Post first reported and Axios has confirmed.

Why it matters: The twin forces of the novel coronavirus sapping demand and collapse of the OPEC-Russia production-limiting deal has created new jeopardy for companies, some of whom are already struggling financially.