Oil's 'historic freefall' shows OPEC doesn't matter: Eurasia's Bremmer
Oil ministers from the OPEC+ coalition held an unscheduled conference call on Tuesday to discuss the collapse in crude prices, though a closing statement signaled they didn’t settle on any new policy measures.
Alarmed by the market’s unrelenting plunge, despite their announcement of record production cuts earlier this month, several producers held informal talks “to brainstorm the current dramatic oil market situation,” the Organization of Petroleum Exporting Countries said on Twitter. They reaffirmed their commitment to the curbs and agreed to hold regular calls to consult on the market.
Crude prices have continued to slump, even though the 23 OPEC+ nations intend to cut global supply by 10 per cent, with futures falling below zero in New York on Monday for the first time ever. The targeted output reduction of 9.7 million barrels a day isn’t nearly enough to counter lost demand as the coronavirus outbreak forces countries to lock down.
“We continue to see extraordinary turmoil in oil markets in this Black April for the industry,” Fatih Birol, executive director of the International Energy Agency, said on Twitter. “The OPEC+ supply cut is a solid start but insufficient to rebalance the market immediately due to the scale of the drop in demand.”
Saudi Arabia, OPEC’s biggest member, reiterated in a statement on Tuesday that it’s prepared for further measures with the rest of the group and its allies to ensure market stability.
The organization has also received a proposal from Algeria, which this year holds OPEC’s rotating presidency, to start the planned cutbacks immediately, instead of May 1 as currently scheduled. The suggestion hasn’t so far received backing from bigger members.
It’s also unclear whether the Saudis and other major exporters in the group like Russia have the will, or the ability, to make deeper cuts. The latest deal already requires participants to make sharp cutbacks, which many will likely struggle to deliver.
The closing statement didn’t specify which producers had participated in the call, though photographs posted by OPEC’s secretariat on Twitter showed representatives from Azerbaijan, Angola, Iraq, Kazakhstan, Nigeria and Venezuela. Russia, one of the most influential countries in the alliance, didn’t participate, according to a delegate.
The statement said that ministers should “continue holding such consultations on the market situation on regular basis.” Venezuelan President Nicolas Maduro earlier suggested to Russian leader Vladimir Putin that OPEC+ should hold one of its monitoring meetings on May 10.