US oil prices fall as OPEC deal falls apart

March 06, 2020: US oil prices ended down more than 10 percent Friday after a proposed deal among petroleum producers to cut output fell apart, raising fears of a glut as the coronavirus outbreak saps demand.

The US benchmark futures contract, West Texas Intermediate for delivery in April, ended at $41.28 a barrel, down 10.1 percent.

The big drop came after major producers failed to agree to production cuts after Russia balked at a proposal by the Organization of the Petroleum Exporting Countries to trim crude output by 1.5 million barrels per day in face of the lower demand due to the epidemic.

Russian Energy Minister Alexander Novak said Friday that talks between OPEC and his OPEC+ grouping have failed to reach an agreement on oil production cuts.

“Regarding cuts in production, given today's decision, from April 1, no one — neither OPEC countries, nor OPEC+ countries — are obliged to lower production,” he told reporters after the meeting.

On Thursday, OPEC ministers, led by Saudi Arabia, had recommended a drastic cut of 1.5 million barrels per day in the face of the global slowdown caused by the new coronavirus epidemic.

But the decision hinged on agreement by the so-called OPEC+ countries led by Russia, the world's second larges oil producer after the US.

Nevertheless, hours of talks between Saudi Arabia, the world's number three producer, and Russia failed to bring about a deal.

Asked whether Russia would ramp up its production after this decision, Novak said this “depended on the Russian (oil) companies' projects”.

 

AFP/APP

Posted on: 2020-03-07T06:45:00+05:00

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