OPEC Only Faces One Choice in China's Coronavirus Crisis - Bloomberg:
Oil producers are starting to feel the impact of the new coronavirus as it continues to spread, and they need to take drastic action to head off a potentially devastating impact on prices. The world’s biggest producers face two key questions, how long will it last and how severe will the consequences will be? The answers are of course still elusive, but the OPEC+ group of nations will need to weigh some educated guesses soon.
The initial reaction resembles that of an agitated anthill, with frantic scurrying in all directions amid an apparent lack of coordination. The final days of last week saw calls for their next meeting, scheduled for the first week of March, to be brought forward, perhaps by as much as a month. That move appeared to be driven by Saudi Arabia, OPEC’s biggest producer, but initially found little support from the largest of the non-OPEC members of the wider group — Russia.
One of the key challenges facing the Organization of the Petroleum Exporting Countries and its big oil-producing counterparts is that they have no idea how big a problem they face. At this point, estimates of the epidemic’s impact on oil demand vary widely. S&P Global Platts sees global oil demand falling by an “almost catastrophic” 2.6 million barrels a day in February and 2 million barrels in March in its worst-case scenario. No wonder producers are in a panic.
Oil producers are starting to feel the impact of the new coronavirus as it continues to spread, and they need to take drastic action to head off a potentially devastating impact on prices. The world’s biggest producers face two key questions, how long will it last and how severe will the consequences will be? The answers are of course still elusive, but the OPEC+ group of nations will need to weigh some educated guesses soon.
The initial reaction resembles that of an agitated anthill, with frantic scurrying in all directions amid an apparent lack of coordination. The final days of last week saw calls for their next meeting, scheduled for the first week of March, to be brought forward, perhaps by as much as a month. That move appeared to be driven by Saudi Arabia, OPEC’s biggest producer, but initially found little support from the largest of the non-OPEC members of the wider group — Russia.
One of the key challenges facing the Organization of the Petroleum Exporting Countries and its big oil-producing counterparts is that they have no idea how big a problem they face. At this point, estimates of the epidemic’s impact on oil demand vary widely. S&P Global Platts sees global oil demand falling by an “almost catastrophic” 2.6 million barrels a day in February and 2 million barrels in March in its worst-case scenario. No wonder producers are in a panic.
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