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OPEC+ meeting delayed as Saudi Arabia and Russia row over oil price collapse: sources

CommoditiesApr 04, 2020 08:05PM ET
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© Reuters. FILE PHOTO: Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman Al-Saud and Russia's Energy Minister Novak are seen at the beginning of a meeting in Vienna

By Rania El Gamal, Vladimir Soldatkin and Alex Lawler

DUBAI/MOSCOW (Reuters) - OPEC and Russia have postponed a Monday meeting to discuss oil output cuts until April 9, OPEC sources said on Saturday, as a dispute between Moscow and Saudi Arabia over who is to blame for plunging crude prices intensified.

The delay came amid pressure from U.S. President Donald Trump for the Organization of the Petroleum Exporting Countries led by Saudi Arabia and its allies, a group collectively known as OPEC+, to urgently stabilise global oil markets.

Oil prices hit an 18-year low on March 30 due to a slump in demand caused by lockdowns to contain the coronavirus outbreak and the failure of OPEC and other producers led by Russia to extend a deal on output curbs that expired on March 31.

OPEC+ is working on a deal to cut the production of oil equivalent by about 10% of world supply, or 10 million barrels per day, in what member states expect to be an unprecedented global effort including the United States.

Washington, however, has yet to make a commitment to join the effort and Russian President Vladimir Putin on Friday put the blame for the collapse in prices on Saudi Arabia - prompting a firm response from Riyadh on Saturday.

"The Russian Minister of Energy was the first to declare to the media that all the participating countries are absolved of their commitments starting from the first of April, leading to the decision that the countries have taken to raise their production," Saudi Energy Minister Prince Abdulaziz bin Salman said in a statement reported by state news agency SPA.

Putin, speaking on Friday during a video conference with government officials and the heads of major Russian oil producers, said the first reason for the fall in prices was the impact of the coronavirus on demand.

"The second reason behind the collapse of prices is the withdrawal of our partners from Saudi Arabia from the OPEC+ deal, their production increase and information, which came out at the same time, about the readiness of our partners to even provide a discount for oil," Putin said.

The Saudi Foreign Minister Prince Faisal bin Farhan Al Saud disputed Putin's claims, saying Russia had withdrawn and that statements about the kingdom's withdrawal from the OPEC+ deal was devoid of truth, state agency (SPA) reported on Saturday.

OPEC sources, who asked not be identified, said the emergency virtual meeting planned for Monday would likely now be postponed until April 9 to allow more time for negotiations.

OPEC sources later downplayed the Saudi-Russia row, saying the atmosphere was still positive, although there was no draft deal yet nor agreement on details such as a reference level from which to make the production cuts.

"The first problem is that we have to cut from the current production level now, not to go back to the one before the crisis," one of the OPEC sources said. "The second issue is the Americans, they have to play a part."

OIL RISES FROM LOWS

Oil recovered from this week's lows of $20 per barrel with Brent settling at $34.11 on Friday, still far below the $66 level at the end of 2019. Prices had their biggest one-day gain ever on Thursday when Trump said he expected Russia and Saudi Arabia to announce a major production cut.

The United States is not part of OPEC+ and the idea of Washington curbing production has long been seen as impossible, not least because of U.S. antitrust laws.

Still, the oil price crash has spurred regulators in Texas, the heart of U.S. oil production, to consider regulating output for the first time in nearly 50 years.

But U.S. Energy Secretary Dan Brouillette, in a call with oil industry leaders on Friday, did not mention the possibility of U.S. production cuts, a source who listened to the call said.

On Saturday, U.S. President Donald Trump focused instead on tariffs as a response to the oil price crash.

"If I have to do tariffs on oil coming from outside or if I have to do something to protect our ... tens of thousands of energy workers and our great companies that produce all these jobs, I'll do whatever I have to do," Trump told reporters in a briefing about the coronavirus outbreak.

"The President has now told us what Plan B is: tariffs," said Robert McNally, president of Rapidan Energy Group in Bethesda, Maryland.

Russian Energy Minister Alexander Novak told Russian state media he understood that the United States had legal restrictions on output cuts but it should still be flexible.

Other oil producers that do not belong to OPEC+ have indicated a willingness to help. Canada's Alberta province, home to the world's third-largest oil reserves, is open to joining any potential global pact.

Norway, Western Europe's largest oil and gas producer, said on Saturday it would consider cuts to its oil output if a wide global deal is agreed.

Mexican President Andres Manuel Lopez Obrador on Saturday called on Russia and Saudi Arabia to reach a deal soon to end their price war.

The International Energy Agency warned on Friday that a cut of 10 million bpd would not be enough to counter the huge fall in oil demand. Even with such a cut, inventories would increase by 15 million bpd in the second quarter.

OPEC+ meeting delayed as Saudi Arabia and Russia row over oil price collapse: sources
 

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Comments (72)
sholey Thakur
sholey Thakur Apr 06, 2020 12:06AM ET
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WASHINGTON (Reuters) - U.S. President Donald Trump said on Saturday he would impose tariffs on crude imports if he has to "protect" U.S. energy workers from the oil price crash that has been exacerbated by a war between Russia and Saudi Arabia over market share. "If I have to do tariffs on oil coming from outside or if I have to do something to protect our ... tens of thousands of energy workers and our great companies that produce all these jobs, I'll do whatever I have to do," Trump told reporters in a briefing about the coronavirus outbreak.
Khyati Patel
Khyati Patel Apr 05, 2020 12:08PM ET
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What stocks are you trading to short oil?
crude oil
crudeoiltrader20 Apr 05, 2020 12:08PM ET
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futures not stock. the company may upward when oil price down
sholey Thakur
sholey Thakur Apr 05, 2020 12:08PM ET
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Oil will jump wTch the trump tarrif announcement at 11am
Proble Matic
Proble Matic Apr 05, 2020 7:48AM ET
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took this article with a block of salt. too many unidentified he said she said sources.
Chukwuma Ememe
Chukwuma Ememe Apr 05, 2020 6:07AM ET
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Any meaningful talk and action will be possible only after all is said and done with the covid19 pandemic. The world will be seeing "shows" from the stake holders.
Vijay Boda
Vijay Boda Apr 05, 2020 5:26AM ET
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More than half of the world is in lock down, Air lines not running, many factories have been closed, no tourism, stock storage is kind of full in every country who bought at cheaper price, and yet no medicine or vaccine to the Covid-19. So, there is no point why would the Oil price go up, even cut down the production, it is still a very much Bear market. Probably Oil is going to break the lowest low of this year.
Anton Gavrilenko
Anton Gavrilenko Apr 05, 2020 5:15AM ET
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vote like- for price go up on monday  unlike- go down
Tim Sanders
Tim Sanders Apr 05, 2020 4:12AM ET
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We all know that’s a lie. I hate it as much as the next guy, but we are going into a depression, the US will never be the same again for a very long time. Some just don’t want to deal with the facts.
crude oil
crudeoiltrader20 Apr 05, 2020 4:12AM ET
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I also very disappointed in Trump's response to corona virus. why not focus on fighting to win virus to survive.
crude oil
crudeoiltrader20 Apr 05, 2020 2:28AM ET
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gap up or down Monday? if you have made 30% or 40% drug last monday.will you close positions to lock profits?. only the fool will wait for a profits of 100%. if runing profits is 10% or 20% around. I may hold long positions and monitor market. if I made 30% and 40%. i can't accept the huge profits disappear again. I will close positions with no hesitant. a big gap down will comes on Monday. shorts and profit position close. will long again after it down a lot. this is speculation
Jerome NY
Jeff_Musk Apr 05, 2020 2:28AM ET
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It’s up to you. But I’d rather wait until at least 60-70% rise from the bottom. The truth is that everyone believes the oil price would be reach at least 42-45 a year later at the latest.
IN siderstradout
IN siderstradout Apr 04, 2020 11:32PM ET
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Oil storage capacity has globally exhausted, and this will also cause prices to spike, once they won't pump it for a while let remaining only the loaded tanks and that'd supply normalized demand for only a few days!
Ivan Rush
Ivan Rush Apr 04, 2020 11:32PM ET
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US companies will go bankrupt thats why no one in the US is doing it
TeaMaker Tex
TeaMaker Tex Apr 04, 2020 10:13PM ET
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Another negatively biased headline.
crude oil
crudeoiltrader20 Apr 04, 2020 10:13PM ET
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I don't blame. I respect the world. and already placed 100 lots short position Friday. will short more Monday if have chance.
IN siderstradout
IN siderstradout Apr 04, 2020 9:08PM ET
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These leaders, I won't mention, are evil and whant other oil producer countries along with their workers and economies suffers in their favour. All the importers should boycott OPEC imports to preserve their industry, and then these evil guys would taste back their own venom.
Johney Rex
Johney Rex Apr 04, 2020 8:58PM ET
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The price will back to last wednesday price on next monday morning.
crude oil
crudeoiltrader20 Apr 04, 2020 8:58PM ET
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I hope so. we already made 45% from 20 to 29. we need another short to make another 30%.from 29 to 20. amazing
Owais Qazi
Owais Qazi Apr 04, 2020 8:58PM ET
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Johney Rex may be you are right 60%✓
Fabio falec
falec Apr 04, 2020 8:58PM ET
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You are missing the point that when it opens the game is already done!
Richard Sullivan
Richard Sullivan Apr 04, 2020 8:54PM ET
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if the economy is 80% shut down then I don't understand how anyone can figure that demand is going to only drop 30%. Seems like bad math.
crude oil
crudeoiltrader20 Apr 04, 2020 8:54PM ET
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because refiners are store more inventories buying at the low prices. this is considered as demand of crude oil. but if shutdown keep going. the demand also drop more than 30%
john richards
john richards Apr 04, 2020 7:21PM ET
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Damn it feels awful knowing Russia is being impoverished, the ruble crumbling-not looking great for that 3D chess grandmaster  Putin as the always wrong leftists were touting not more than 18months ago.
Dietmar Stahl
Dietmar Stahl Apr 04, 2020 6:50PM ET
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Everyone driving Tesla now. Who needs oil. It will lower and lower anyway. Saudi Arabia can use their desert sand and switch to Solar cell production for sale and install solar farms to export energy derived of the solar farms.
Robert Flores
Robert Flores Apr 04, 2020 6:19PM ET
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Everything is politicized and the big egos love the attention as they pretend to be world leaders. But law and demand will do what it has to. First drop the less efficient rigs by the most vulnerable companies(its already happening) as many of these US companies will file bankruptcies into summer, demand will start picking up as the virus subsides and price will manage to get back in the 40s, maybe 50s, enough to give many remaining US companies a breather; only to drop again in the fall anf winter. Eventually we will see the one of the biggest price swings in history upwards of 120dlls by the year 2022 as inflation sets in, and many smaller players weeded out
Tim Sanders
Tim Sanders Apr 04, 2020 6:08PM ET
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Next 4 weeks will be very deadly. President Trump on Saturday warned the nation of a deadly week ahead in the fight against the coronavirus as the number of Americans infected passed 300,000. "This will probably be the toughest week -- between this week and next week," Trump said Saturday at the beginning of his coronavirus task force briefing at the White House.
Javier Salazar Acevedo
Javier Salazar Acevedo Apr 04, 2020 5:45PM ET
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What’s gonna be the possible aperture price tomorrow with this news?
Robert Flores
Robert Flores Apr 04, 2020 5:45PM ET
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Id say between 24 and 25
Rod Deh
Rod Deh Apr 04, 2020 5:21PM ET
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doesnt opec have to cut output anyways since we are running out of places to store it?
crude oil
crudeoiltrader20 Apr 04, 2020 5:21PM ET
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yes. it's correct. but who should cut off and how much to cut is hard to reach agreement. if you cut much. others may rub your market share immediately. so only market itself can resolve this trouble in front of widespread if corona virus
Adel Youssef
Adel Youssef Apr 04, 2020 5:10PM ET
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Seriously , they want to know who to blame
crude oil
crudeoiltrader20 Apr 04, 2020 5:10PM ET
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yes. if one country should to be blamed. it will need cut more than others. everyone knows and want to cut to support price but no one wanna cut bigger than other countries. cutting off can't save as the demand is the problem. why not spend more on fighting virus to resume consumption earlier. very funny of Trump saying protect oil workers job while he even can't save their life
First name Last
OILisCRASHING Apr 04, 2020 4:48PM ET
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Looks to me OIL is headed lower surprise surprise lol
dim dim
dim dim Apr 04, 2020 4:47PM ET
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TRAMP says, you all have to cut your production, but the US doesn't, because it has legal problems ... OK, so first solve the issue, there in the USA how and there will be, reduction, in production, and then Trump, the request for reduce oil production from the others,  ie, what does say everyone must reduction in production and the USA earning money from rising prices !!! this is crazy !!!
Don Beckham
Don Beckham Apr 04, 2020 3:18PM ET
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What dictionary did this author use to think their use of the word "row" is correct.  It's being used as a verb. And, the only proper use as a verb is in the context of a boat. Where does Investing.com come up with these authors?  So many mistakes. It's like journalism is their hobby, and English is was an elective.
Robert Flores
Robert Flores Apr 04, 2020 3:18PM ET
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You know, I have noticed over the years! Lol
Ilari Mäkelä
Ilari Mäkelä Apr 04, 2020 3:18PM ET
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For your information, this article is written by Reuters and they do know their grammar quite well.
Joe Gableguts
Joe Gableguts Apr 04, 2020 3:18PM ET
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Row means fight. In the British manner of speaking.
crude oil
crudeoiltrader20 Apr 04, 2020 3:18PM ET
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I guess Trump is good at words. last Twitter he used the word"Expecting" this imply the public with misunderstanding. but we can't say he is wrong. this time he use the word"considering" come on. this couldn't be the first day he start considering the tariff weapon. he is really good at words. but they are only beautiful lies. can't last for long
Jon Buh
Jon Buh Apr 04, 2020 2:58PM ET
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too many experts here trying to justify their position lol just gotta bet againds majority of them
Ricky Singh
Ricky Singh Apr 04, 2020 2:58PM ET
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Seems so easy to short and see the red sea based on current situation but there is always a catch and market usually surprises allSo am with u !! Some new gonna push the market to green on monday and tuesday before the meetings !!!
Chan Cy
Chan Cy Apr 04, 2020 2:37PM ET
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https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKBN21L2MUPutin agree to cut 10%
 
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