An Opec+ committee has recommended an additional cut in oil output totaling 600,000 barrels per day in response to the coronavirus’ impact on energy demand as it awaits Russia’s final position on the proposal, three sources told Reuters.
The Joint Technical Committee (JTC) is not a decision-making body, but does advise Opec+, which includes most Opec members plus 10 non-Opec producers led by Russia, Kallanish Energy understands.
Opec+ produces over 40% of global oil and the new proposed cut would constitute roughly 0.6% of global supply.
Brent on Thursday lost 23 cents, or 0.3%, to trade at $55.05 per barrel, while U.S. West Texas Intermediate gained 20 cents, or 0.4%, to settle at $50.95/Bbl.
Opec+ ministers have not decided on additional action, but the recommendation Thursday by all members of the JTC, which includes Saudi Arabia and Russia, would signal progress towards a decision.
“The recommendation is for a cut of 600,000 Bpd. Russia has asked for more time for consultations,” one of the sources told Reuters.
Another Opec source said the proposed output cut of 600,000 Bpd, if agreed to by all members, will start immediately and continue until June.
A 600,000 Bpd cut would bring the total production cut Opec+ will work under will climb to 2.3 million barrels per day.
“The 600,000 bpd has taken into consideration the expected return of Libya oil production and all scenarios such as oil demand growth elsewhere,” the second source told Reuters, adding the proposed cut was enough to counter the expected drop in oil demand due to the coronavirus.
The Opec+ ministers must still decide on whether to move their upcoming policy meeting to February from March 5-6, the sources said.
The JTC panel extended its meeting into a third day on Thursday after Russia stated its opposition to a deeper supply cut and was instead suggesting an extension of current cuts.
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