RPT-COLUMN-Coronavirus demand hit renders OPEC+, Trump manoeuvres irrelevant: Russell - Reuters

RPT-COLUMN-Coronavirus demand hit renders OPEC+, Trump manoeuvres irrelevant: Russell - Reuters:

Imagine for a moment that the Organization of the Petroleum Exporting Countries (OPEC) and Russia had agreed at the start of this month to extend and deepen their crude oil output cuts. It wouldn’t have made the blindest bit of difference.

While it was only three and half weeks ago, though it feels as long as a lifetime, the collapse of the deal between OPEC and allies, including Russia, to limit output is no longer relevant in a world devastated by coronavirus.

If OPEC and its allies, known as OPEC+, had agreed to extend the 2.1 million barrels per day (bpd) and add a further 1.5 million bpd, there is little doubt crude prices wouldn’t have crashed as they did in the wake of the breakdown of the talks, and the subsequent move by top exporter Saudi Arabia to flood the market.

But the rapid spread of the coronavirus beyond its origin in China to most of the populated world, including the major crude demand centres of Europe and North America, means that the current price slump was inevitable, as the scale of the loss of global demand would have simply overwhelmed the OPEC+ output deal, assuming it had been extended and increased.