COVID19: OPEC Backs Extra Oil Production Cut

The Organization of the Petroleum Exporting Countries (OPEC) led by Saudi Arabia has agreed to further cut oil production to 1.5 million barrel per day, deepest cut since 2008.

The 14-member group came to the consensus during its a two days meeting in Vienna on Thursday saying the coronavirus outbreak had created risks “skewed to the downside”, and prompt action was needed.

According to the group, the cut is going to be adjusted until 30 June 2020 and will be applied pro-rata between OPEC and non-OPEC producing countries at 1.0mb/d and 0.5mb/d respectively.

The support for an oil production cut to avoid weaker demand amid the coronavirus outbreak, however, remains conditional until it gets approval from Russia.

Since the outbreak of the virus in Wuhan, China, the global economy has grown on a slow pace as the virus continues to spread widely across the world.

OPEC, however, forecasts that demand growth would slash to 0.48mb/d down from 1.1mb/d in December 2019 as business activity slowed.

Meanwhile International benchmark Brent crude traded at $51.33 on Thursday, up by 0.4%, while U.S. West Texas Intermediate (WTI) stood at $47.11, around 0.7% increase.