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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.

Go deeper

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Prime Minsiter Boris Johnson. Photo: NurPhoto / Getty Images

A new national lockdown will be imposed in England, Prime Minister Boris Johnson announced Saturday, as the number of COVID-19 cases in the country topped 1 million.

Details: Starting Thursday, people in England must stay at home, and bars and restaurants will close, except for takeout and deliveries. All non-essential retail will also be shuttered. Different households will be banned from mixing indoors. International travel, unless for business purposes, will be banned. The new measures will last through at least December 2.

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Early voting in the 2020 election across the U.S. on Saturday had already reached 65.5% of 2016's total turnout, according to state data compiled by the U.S. Elections Project.

Why it matters: The coronavirus pandemic and its resultant social-distancing measures prompted a massive uptick in both mail-in ballots and early voting nationwide, setting up an unprecedented and potentially tumultuous count in the hours and days after the polls close on Nov. 3.

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Illustration: Sarah Grillo/Axios

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  2. World: Greece tightens coronavirus restrictions as Europe cases spike — Austria reimposes coronavirus lockdowns amid surge of infections
  3. Economy: Conference Board predicts economy won’t fully recover until late 2021.
  4. Technology: Fully at-home rapid COVID test to move forward.
  5. States: New York rolls out new testing requirements for visitors.