LONDON/MOSCOW/DUBAI – Saudi Arabia has opened talks with OPEC and allied oil producers about moving their upcoming OPEC+ policy meeting to early February from March, four OPEC+ sources said, after a swift slide in oil prices alarmed Riyadh.
Worries over the economic impact of China’s coronavirus have rattled global markets, helping send the price of crude down to around $58 a barrel from above $65 a barrel on Jan. 20.
No final decision over the new date of the meeting has been made, and not all OPEC members are on board yet, with Iran a possible contender to oppose the move, the sources said.
OPEC+, which includes Russia, has been reducing oil supply to support prices, agreeing in December to hold back 1.7 million barrels per day (bpd) of output until the end of March.
OPEC wants to extend current oil output cuts until at least June from March, with the possibility of deeper reductions on the table if oil demand in China is significantly impacted by the spread of the coronavirus, OPEC sources told Reuters on Tuesday.
Russia is yet to officially communicate its final position on bringing forward the OPEC+ meeting, the sources said.
One Russian oil source suggested Moscow may want to reassure the market it is willing to bring forward the meeting to prevent oil prices from falling further.
Countries have started isolating hundreds of citizens evacuated from the Chinese city of Wuhan on Thursday to try to stop the spread of an epidemic that has killed 170 people.
Saudi Arabia, OPEC’s de-factor leader, and other OPEC members are worried the continued spread of the virus could hit oil demand and lead prices to fall further, the sources said.
“The Saudis want to put a floor under the oil prices, they want to do something to prevent prices from falling more. There are several discussions going on between the countries now about that,” one OPEC+ source said, adding Riyadh did not want to see oil prices below $60 a barrel.
Saudi Arabia’s economy, the largest in the Arab world, remains dominated by hydrocarbon revenues despite plans to diversify. The kingdom wants high oil prices to balance its state budget.
“The Saudis are the ones wanting to move it forward,” said a non-Saudi OPEC source. Another OPEC source said not all in OPEC were on board with bringing forward the meeting, including Iran.
Algeria’s energy minister Mohamed Arkab said on Wednesday it was “very possible that OPEC+ meeting could be advanced to February instead of scheduled meeting in March,” the state press agency reported.
The source familiar with Russian thinking said the OPEC+ meeting would most likely take place over the early weeks of February but no final decision had been made.
“It is better to reassure the market in February than to wait for further sliding (in prices),” that source said.
The Russian energy ministry declined to comment. The Saudi energy ministry could not immediately be reached for comment.