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Talks between OPEC and Russia ended Friday without a deal to deepen or extend oil production cuts as the economic slowdown from the novel coronavirus saps global demand, sending already-soft prices sharply downward.

Why it matters: The collapse of OPEC+ negotiations in Vienna marks a massive rupture in the three-year-old collaboration between giant producers Saudi Arabia and Russia to exert more control of the market amid the rise of U.S. shale production.

Oil is trading at its lowest levels since mid-2017. "The result of today's failed meeting will be a free fall in crude prices, with no floor currently in sight," Rapidan Energy Group said in a note.

Expand chart
Data: FactSet; Chart: Axios Visuals

Driving the news: Russia, per multiple reports, refused to endorse an OPEC proposal a day earlier to increase their joint production curbs by 1.5 million barrels per day until the end of 2020.

"Russia's budget is more resilient to low prices than its Middle Eastern allies and it's betting that weak crude values will help wipe out competitors that produce U.S. shale," Bloomberg notes.

What's next: The existing deal that curtails production by 2.1 million barrels per day is now slated to expire at the end of this month.

The OPEC+ group that includes Russia and several other non-OPEC producers remains formally intact but it's unclear what's next.

  • The talks collapse comes amid analysts' estimates that global oil demand has contracted sharply and in 2020 may even decline on a yearly basis compared to 2019.
  • On Monday the International Energy Agency is set to issue closely watched downward revisions of its global oil demand estimates.

What they're saying: "[T]he market is now facing the spectre of unrestrained production once the current OPEC+ agreement expires in March," Wood Mackenzie analyst Ann-Louise Hittle said in a note Friday.

  • However, she adds: "Given weak demand and the likelihood this weakness will persist into the second quarter, it will be hard for any producer to increase their output sharply once the original production deal expires at the end of this month."

Rapidan's note says Russian leaders see the coronavirus requiring deeper and longer cuts — on the order of 3 million to 4 million barrels per day for two years — than it was willing to make.

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The big picture: Cuomo has denied all sexual harassment allegations against him and said that he "never inappropriately touched anybody." He acknowledged in a statement that "some of the things I have said have been misinterpreted as an unwanted flirtation." Some of the calls for Cuomo to resign have come from within the Democratic party.

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New York Times columnist David Brooks' resignation from a paid gig at a think tank on Saturday is the latest in a flurry of scandals that America's biggest and most successful newspaper company has endured in the past year.

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