Citing sources familiar with Saudi Arabia’s thinking, Reuters reports that the Kingdom urges the OPEC and its allies (OPEC) to quickly reach an agreement on oil production cuts to respond in a timely manner to the negative impact of China coronavirus on global oil demand.
The sources said: Riyadh sees a potentially bigger impact on oil demand this time than the 2002-03 Severe Acute Respiratory Syndrome (SARS) epidemic due to China’s now far larger role in the global economy.
One OPEC source said Riyadh wanted a quick supply cut to “put a floor under the prices”.
“The Saudis want to be proactive and to keep oil prices at $60 a barrel or above,” the source added.
One of the sources said: “This is about taking preemptive measures against future uncertainties …it is about lessons learnt from the past.”
Sources said the technical panel also recommended this deal be extended until the end of 2020.
This comes as the OPEC+ awaits Russia’s decision on the output cuts proposal. On Tuesday, Russian Energy Minister Alexander Novak said that they were closely studying recommendations of OPEC+ technical committee.
Oil bulls hold the reigns
Both crude benchmarks ride the risk-on wave, driven by fading coronavirus concerns. WTI rises 1.50% to 50.70 while Brent is up 2% just above $55, at the time of writing.