OPEC. Photo: NurPhoto / Getty Images
A pivotal Monday meeting among oil-producing countries to discuss supply curbs is reportedly being delayed amid tensions between Saudi Arabia and Russia, the leading players in the OPEC+ group.
Why it matters: Travel and economic freezes from COVID-19 are causing an unprecedented drop in oil demand that has caused prices to crater.
The early March collapse of the OPEC+ production-limiting agreement added even more downward pressure.
- The postponement follows sniping over the last day between Russia and Saudi Arabia over which side is to blame for the March rupture in the roughly three-year-old pact.
- The Saudi foreign minister, in a statement, said Russian claims about the rupture and the Saudi posture toward U.S. shale producers were "fully devoid of truth."
The big picture: The push for new supply cuts is complicated because the Saudis and Russians have signaled they want other nations to join the curbs, including the U.S., the world's largest producer.
- The U.S. market system does not enable top-down decisions on output. However, the collapse in prices and demand, and related logistical constraints, will begin pushing U.S. production lower.
What they're saying: “We always remained skeptical about this wider deal as U.S. producers cannot be mandated to cut,” oil analyst Amrita Sen of Energy Aspects Ltd. tells Bloomberg.
“If so, Russia doesn’t come to the table. And if everyone doesn’t cut, Saudi Arabia’s long held stance is that they will not cut either," she said.
What we're watching: What happens to oil prices when trading resumes Sunday evening. Prices have surged in recent days on the prospect of a new production-cutting pact.
- The global benchmark Brent crude rose to roughly $34-per-barrel on Friday, about $10 higher than where it was mid-week.
- Quick take: A steep decline when markets re-open will signal that traders think prospects for a deal have become more remote.