Can Opec stop the slide in the oil price? | Financial Times:
The coronavirus outbreak has interrupted economic activity in China with entire cities on lockdown and travel restrictions putting a huge dent in demand for oil. Quite how much this will hit crude demand is unclear — but Chinese energy executives have said oil consumption in the country in February could be 25 per cent lower than a year earlier. That is the equivalent of a 3 per cent drop in global consumption.
As uncertainty lingers about when the transmission of the virus will peak, oil prices have tumbled more than 15 per cent since the beginning of the year to trade around $55 a barrel, a level at which many smaller producers struggle to remain profitable.
The demand shock and resulting price plunge is jolting Opec nations led by Saudi Arabia and ally producers including Russia into action to support prices. The group’s advisory body has recommended that they deepen their existing supply cuts by 600,000 barrels a day to a total of 2.7m b/d for the first half of 2020.
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