The likelihood of further production cuts by Opec and non-opec producers has increased

[ Time:2020-03-07 | Hits:383 ]

The organisation of the petroleum exporting countries (Opec) and non-opec producers are moving closer to an agreement on further production cuts to help international oil prices recover.

The organization of petroleum exporting countries (Opec) is scheduled to hold a meeting in the Austrian capital Vienna on Friday. Non-opec oil producers including Opec and Russia will meet on Saturday to discuss the latest strategy to balance the crude market. Saudi Arabia and some oil-producing countries are proposing to extend the current agreement to the end of the year and cut a further 1 million barrels a day in the second quarter, sources said, according to Reuters.

The joint technical committee (JTC) of Opec and non-opec oil producers held a meeting on Wednesday, expressing support for Saudi Arabia's proposal to extend the output agreement and further cut output, and saying that Russia may be inclined to support the Saudi proposal. Last month, it recommended a further cut of 600,000 b/d, but is now leaning towards a further cut of 1m b/d.

International oil prices have fallen more than 20 percent this year, and recent worries about a new pneumonia outbreak have weighed on the oil market.

The federal reserve announced on Wednesday that it would cut the target range of the federal funds rate by 50 basis points to between 1% and 1.25%, which is the first time for the federal reserve to cut interest rates this year. The federal reserve interest rate cut to the market is limited, the international crude oil futures prices on the morning after the strong shock, afternoon shock lower, the end of the international oil prices were mixed. By the end of the day, light crude for April delivery was up 43 cents, or 0.92 percent, at $47.18 a barrel on the New York mercantile exchange. In London, brent crude for may delivery fell $0.04, or 0.08%, to $51.86 a barrel.

Saudi Arabia and other Opec members have recently been hoping for further production cuts, but have not been able to persuade Russia to act together. Non-opec producers, including Opec and Russia, agreed in December to cut output by 2.1m barrels a day, starting on January 1 and expiring in March. Some analysts say the cut is not enough to counter the downward trend in the oil market, especially as concerns grow that a new coronavirus outbreak could affect global economic growth and reduce oil demand.

International oil prices have fallen to about $50 a barrel, a level that has put financial pressure on many Opec countries that rely heavily on oil exports. But Russia says the current level of oil prices is acceptable.