An emergency meeting of OPEC and non-OPEC partners, sometimes referred to as OPEC+, will be held on Thursday, as the
OPEC kingpin Saudi Arabia and non-OPEC leader Russia
President Donald Trump said Monday that OPEC hadn’t asked “that question” yet, but suggested U.S.
Crucially, G-20 energy ministers will convene for their own extraordinary meeting one day after OPEC+ producers sit down for talks.
International benchmark Brent crude traded at $33.87 a barrel Tuesday morning, up around 2.5%, while U.S. West Texas Intermediate (WTI) stood at $27.04, more than 3.7% higher.
Brent fell over 3% in the previous session, with WTI down more than 7% amid fading hopes of an unprecedented supply cut. Both benchmarks have fallen more than 50% from their January peak.
The G-20 meeting is “very important” for two reasons, Birol said. “One, even if this Saudi-Russia agreement would take place, and people talk about the 10 million barrels per day production cut, this will not be enough to address the big problem we are facing.”
The IEA chief warned that the energy agency expected stocks to build by about 15 million barrels per day this quarter, so a deal might put an “upbeat mood in the markets for a couple of days (or) couple of weeks, but people will realize there is still a huge amount of oil in the market.”
“The second (reason)
Saudi Arabia could let weaker competitors ‘wither’
The restrictions have created an unprecedented demand shock in energy markets, just as a price war broke out between powerhouse producers Saudi Arabia and Russia.
ALEXEY NIKOLSKY | SPUTNIK | AFP via Getty Images
Saudi Arabia will most likely look to keep production running between 12 million barrels per day and 13 million barrels per day, Schieldrop said, “letting weaker competitors wither or die” in the current market trough.
But, if there is a deal, a widely-based agreement involving both OPEC and G-20 members would probably cut roughly 10 million barrels per day when compared to first-quarter 2020 production levels.
“That will still leave the oil market with a very substantial production surplus, and even that will be of a magnitude the oil market has hardly ever seen before,” Schieldrop said.
‘Long list’ of possible complications
“The most significant obstacle to an OPEC++ deal remains around
“The G-20 forum could provide space for a looser arrangement where explicit U.S.