Ministers from the OPEC group of oil-producing countries started meeting in Vienna Thursday to try to overcome their divisions on how to react to the fall in oil prices in the wake of the novel coronavirus epidemic.
The group already had to contend with abundant supplies weighing on prices but the spread of COVID-19 across the world has sent them plunging.
The European benchmark, Brent crude, sank to under $50 on Sunday, a level not breached since July 2017.
The effects of the virus on global demand — particularly in worst-hit China — has blown a hole through the group’s attempt to support prices at its last meeting in December by agreeing on production cuts of 500,000 barrels per day.
The only option for OPEC — and its allies in the OPEC+ grouping who will be joining meetings on Friday — would appear to be another round of production cuts, but not everybody agrees.
The success of the summit, which has been called three months ahead of the next scheduled meeting, will above all hang on the alliance between Saudi Arabia and Russia, the most important players in the OPEC and OPEC+ groupings respectively.
Saudi Arabia, the world’s third-biggest producer, is a supporter of further cuts, with Riyadh even thought to be amenable to a cut in the order of a million barrels per day.
“An agreement to reduce the OPEC+ group output level by at least one million barrels per day is imperative; otherwise oil prices will re-visit the recent lows and possibly break below them,” said analyst Tamas Varga of PVM Oil Associates.
But Russia, the world number two producer after the United States, may be harder to convince on this score, with Russian President Vladimir Putin being quoted on Sunday as saying the current market price was “acceptable” and above the level foreseen in Russian economic planning.
Russia’s RIA Novosti agency reported Wednesday that Moscow’s delegation was proposing an extension of the existing deal with no fresh cuts.
“Economic activity and oil demand is now collapsing around the world… If Russia does not step up now then what role does it really play in OPEC+?” said Bjarne Schieldrop, a commodities analyst at SEB bank said.
Aside from bridging their differences on the effect of the virus on the market, the assembled officials are also having to accommodate changes to their routines in Vienna.
All those entering the OPEC headquarters have to undergo temperature checks.
After the meeting’s opening speech, a medical advisor passed on hygiene guidelines, while assuring delegates that the risk of coronavirus infection in Vienna was “very, very low”.
Austria nationwide has recorded 39 cases so far.
On Wednesday, OPEC’s Secretary-General Mohammed Barkindo and Russian Energy Minister Alexander Novak were seen in a video tweeted by the organization attempting a “foot shake”, gently bumping the sides of their feet together in a more hygienic alternative to a handshake.
The cartel has also barred access to its headquarters for the media due to the “risk that would come from convening such a vast number of people in one place”.
Livestreams of the beginning of meetings are instead being made available to journalists at a press center in a nearby hotel.
In a statement on Tuesday OPEC said it was following UN guidelines and planned to “shorten the format of such gatherings, limit the number of participants and cancel any related side-events”.