UNITED STATES (OBSERVATORY NEWS) — A committee from the Organization of Petroleum Exporting Countries (OPEC) and its ally Russia began a meeting at the organization’s headquarters in Vienna on Tuesday to discuss its response to the spread of the Corunavirus and its impact on global oil demand.
Oil prices have been falling dramatically since the beginning of this year, in light of concerns about the economy of China, the major consumer of oil, due to the Coronavirus.
Earlier Tuesday, the Iraqi Oil Ministry stated that OPEC is considering reducing production.
And Iraq is the second largest oil producer in the organization.
OPEC reported Tuesday that the Chinese ambassador to the United Nations, Wang Kun, briefed the participants in the “Joint Technical Committee” meeting on China’s response to the Corona virus crisis.
The Secretary-General of the Organization, Muhammad Barkindo, stressed “the full support of OPEC to China, and praised the Chinese leadership” for its quick and strategic response to the spread of the disease.
Barkindo described China’s response as “impressive and worthy of praise.”
The next ministerial meeting of OPEC countries, led by Saudi Arabia and its allies outside the organization, led by Russia, is still scheduled for the fifth and sixth of March. With concern about the Corona virus, it was discussed in recent days that the possibility of a close meeting date could be discussed.
A spokesman for the Iraqi Oil Ministry, Asim Jihad, told Agence France Presse earlier Tuesday that the date of the organization’s ministerial meeting scheduled for March to February could be submitted “according to the needs of the market and the corona virus.”
For his part, Russian Energy Minister Alexander Novak said that the date of the meeting is subject to change. “We have a meeting in March, but it can be held earlier if necessary,” he told reporters.
The number of deaths from the emerging corona virus is 425, and the number of infected people in China has reached twenty thousand since its appearance in December, and it has spread in more than 20 other countries.
The benchmark West Texas standard price has fallen 18% over the past month.
At 16.05 GMT Tuesday, the price of a barrel reached $ 50.56, while the price of Brent oil, the European equivalent, reached $ 54.79 a barrel, slightly higher than its price when the trading closed Monday.
“At the present time, the market appears convinced that China will be able to contain and manage the virus, and that the worst will soon end without an accelerated spread outside of China, and that OPEC and its allies will interfere with production cuts to prevent an excess in inventory,” said Bayerne Childrop, chief commodity analyst at Nordic Bank Sepp. .
“One option is to cut joint production by an extra half a million extra barrels a day,” said Carsten Fritsch of Commerzbank.
“Moreover, there are rumors that Saudi Arabia is ready to temporarily reduce production by up to one million barrels per day,” Fritsch said.
Saudi Arabia said on Monday that the impact of the emerging Corona virus on oil demand “is very limited … and it is driven by psychological factors.”
But Neil Wilson, chief market analyst at Markets.com in London, said, “If the virus continues to spread, the market can be severely affected.”
“We have not seen such a shock in oil demand for more than a decade. The longer the closure process in China and the restrictions on global travel, the greater the impact,” he added.
The 13 OPEC countries meet regularly, in addition to non-members, led by Russia, to discuss how to influence oil prices.
OPEC and its allies in December extended an existing agreement to limit oil production to push prices higher.
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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