OPEC backs biggest oil cut since 2008 crisis, awaits Russia

OPEC on Thursday agreed to cut oil output by an extra 1.5 million barrels per day (bpd) in the second quarter of 2020 to support prices that have been hit by the coronavirus outbreak.

Organisation of the Petroleum Exporting Countries (OPEC) also made its action conditional on Russia and others joining in.

The oil demand outlook has been pummelled by global measures to halt the spread of the virus, prompting it to consider its deepest cut since the 2008 financial crisis.

Demand growth forecasts in 2020 have been slashed as factories have been disrupted, people have been deterred from travelling and other business activity has slowed.

Saudi Arabia has been pushing OPEC and its allies, including Russia, for a big cut up to 1.5 million bpd for the second quarter of 2020 while extending existing cuts of 2.1 million bpd, which expire this month, to the end of 2020.

However, Riyadh, the biggest OPEC producer, and other OPEC states have struggled to persuade Russia to support the move.

Moscow has till now indicated it would back an extension but not a new cut.

Russia, which has co-operated on output policy since 2016 in the informal group known as OPEC+, has in the past been hesitant during talks but has signed up at the last minute.

Moscow will take part in the OPEC+ ministerial meeting in Vienna on Friday.

OPEC said in a statement after its ministers met that the coronavirus outbreak created an “unprecedented situation” with risks “skewed to the downside”, adding that action was needed.

It said ministers agreed to an extra supply cut of 1.5 million bpd until June, out of which non-OPEC states were expected to contribute 500,000 bpd.

The group said this was in addition to extending existing supply curbs to the end of 2020.

Report says OPEC holds its next ministerial meeting on June 9.