OPEC Is Too Unwieldy in Face of Coronavirus Impact on Oil - Bloomberg:
Just when OPEC needs all the agility it can muster in the face of an oil demand shock of uncertain severity and unknown duration, it’s bogged down in protracted negotiations and a 60-year-old mechanism for deciding output allocations that’s far too cumbersome in a time of crisis.
The 13 oil-exporting nations in the cartel, and their partners in what’s called OPEC+, have to be able to react quickly to the rapidly-changing world around them. Instead, they are locked in a debate over whether they should even meet, and what they should agree on if they do. By the time they get answers to those questions, it may already be too late.
A week ago Saudi Arabia, OPEC’s biggest producer, was pressing for meetings scheduled for March to be brought forward so everyone could agree on deeper output cuts to halt the slide in oil prices triggered by the outbreak of a new coronavirus in China. Russia, the largest of the wider group’s non-OPEC members, was pushing back, arguing that more time was needed to assess its impact on oil demand. Since then, the cartel’s Joint Technical Committee met over three days and put forward a proposal to remove a further 600,000 barrels a day in the second quarter of the year.
Just when OPEC needs all the agility it can muster in the face of an oil demand shock of uncertain severity and unknown duration, it’s bogged down in protracted negotiations and a 60-year-old mechanism for deciding output allocations that’s far too cumbersome in a time of crisis.
The 13 oil-exporting nations in the cartel, and their partners in what’s called OPEC+, have to be able to react quickly to the rapidly-changing world around them. Instead, they are locked in a debate over whether they should even meet, and what they should agree on if they do. By the time they get answers to those questions, it may already be too late.
A week ago Saudi Arabia, OPEC’s biggest producer, was pressing for meetings scheduled for March to be brought forward so everyone could agree on deeper output cuts to halt the slide in oil prices triggered by the outbreak of a new coronavirus in China. Russia, the largest of the wider group’s non-OPEC members, was pushing back, arguing that more time was needed to assess its impact on oil demand. Since then, the cartel’s Joint Technical Committee met over three days and put forward a proposal to remove a further 600,000 barrels a day in the second quarter of the year.
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