OPEC and other oil nations held talks on Thursday on record production cuts of up to 20 million barrels per day, equivalent to about 20 percent of global supplies, to support prices hammered by the coronavirus crisis, OPEC and Russian sources said.
Oil prices jumped Thursday on the news with Brent futures up $2.24, or 6.8 percent, at $35.08 a barrel by 2.30 p.m. GMT, while US crude rose $2.18, or 8.7 percent, to $27.27.Talks have been complicated by frictions between OPEC leader Saudi Arabia and non-OPEC Russia, but OPEC and Russian sources said they had managed to overcome differences.“That is a global deal,” one OPEC source said, without specifying whether it would involve the participation of the United States, something Russia and OPEC producers have insisted on.Global fuel demand has plunged as much as 30 million bpd, 30 percent of global supplies, as measures to fight the coronavirus have grounded aircraft, reduced vehicle usage and curbed economic activity.Benchmark Brent oil prices hit an 18-year low last month and are trading around $35 a barrel, almost half their level at the end of 2019, dealing a severe blow to budgets of oil producing nations and high-cost US shale oil industry.
US President Donald Trump said last week a deal he had brokered with Saudi Arabia and Russia could lead to cuts of 10 million to 15 million bpd, even that figure, lower than the one cited by sources on Thursday, was unprecedented. The biggest one-off cut previously agreed by OPEC alone was 2.2 million bpd during the 2008 financial crisis.OPEC sources have also indicated such a big cut was possible, if the United States joined in. But Washington has yet to show it is ready to take part.Kremlin spokesman Dmitry Peskov said a new deal on cuts was “hardly possible” without others participating.