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Algeria: OPEC countries to consider significant oil output cuts

The Organization of the Petroleum Exporting Countries (OPEC) will consider making "substantial" further oil production cuts to lift prices that have dropped following the coronavirus outbreak, Algeria's oil minister said yesterday.

"OPEC will discuss the possibility of a new substantial cut by withdrawing from the market the quantities that are not consumed due to the coronavirus outbreak," Mohamed Arkab told official Algeria Press Service (APS). His comments came on the sidelines of an OPEC meeting held in the Austrian capital of Vienna.

"The trend is towards the continuation of the cuts adopted in December 2019," Arkab, OPEC president, added, noting that there was a "consensus between OPEC and non-OPEC, including Russia, on the point of continuing oil cuts."

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Reuters reported that the so-called OPEC+ group was considering deepening its existing cuts by removing a further 1 million bpd, although Russia has so far proved reluctant to back that proposal despite a 20% fall in oil prices since the start of the year.

OPEC, Russia and other producers already have a deal in place to cut output from Jan. 1 by 2.1 million barrels per day (bpd), a figure that includes additional voluntary cuts by Saudi Arabia.

But that has not been enough to counter the impact of the virus on China, the world's biggest oil importer, and on the global economy, as factories are disrupted, fewer people travel and other business slows, which have curbed oil demand.

Before this week's meeting, sources said that Saudi Arabia and some others producers were proposing an extension to the existing pact beyond its March expiry until the end of 2020 while also cutting another one million bpd of output only for the second quarter of the current year.

OPEC ministers are due to meet on Thursday, while ministers from the wider OPEC+ group are expected to meet on Friday. Under the existing agreement, OPEC and its allies agreed at the end of last year to cut 1.7 million bpd from the market while Saudi Arabia, OPEC's biggest producer, made voluntary additional cuts of 400,000 bpd.

 

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