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OPEC supports additional output cut by 1.5 million barrels

5 Mar 2020 03:15 PM

OPEC agreed today to cut output by 1.5 million barrels per day in the second quarter of 2020 to support prices amid the coronavirus outbreak, but made it conditional on Russia's accession, two OPEC sources said.

Saudi Arabia has proposed to OPEC and its allies, including Russia, to cut up to 1.5 million barrels per day for the second quarter of 2020 while maintaining the current cuts of 2.1 million barrels per day, which expire this month, until the end of 2020.

But Riyadh, the largest producer of the Organization of Petroleum Exporting Countries (OPEC) and other members of the group, has yet to receive Russia's support for such a deal. So far, Moscow has indicated that it will support the extension, but not for a deeper reduction.

Moscow, which has cooperated in production policy since 2016 in an informal group known as OPEC, has hesitated in the past during the negotiations, but it has occurred at the last minute.

OPEC sources indicated that preliminary talks with Russia this week in Vienna were more difficult than ever.

If OPEC+ decides to cut an additional 1.5 million barrels per day from the market, the group's total production would be 3.6 million barrels per day, or about 3.6 percent of global supplies.

The Russian energy minister returned to Moscow for consultations on Wednesday but will return to Vienna on Friday for the broader OPEC meeting, and Novak made no public statements during his trip this week to Vienna.

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