Saudi-Russia alliance under pressure at OPEC meeting, as coronavirus saps oil demand

KEY POINTS
  • Some of the world’s most powerful oil-producing nations are expected to agree on a deeper round of production cuts this week, although the extent of the reduction is unknown.
  • Analysts said that while Saudi Arabia might have appetite for higher oil prices, Moscow is “perfectly happy” with crude futures between $50 and $60.
  • OPEC and non-OPEC producers — sometimes referred to as OPEC+ — will meet in Vienna, Austria on March 5-6.

The energy alliance between Saudi Arabia and Russia will likely come under intense scrutiny this week, as delegates from some of the world’s most powerful oil-producing nations discuss how best to cushion the impact of the coronavirus outbreak.

OPEC and non-OPEC producers, such a Russia, sometimes referred to as OPEC+, will meet in Vienna, Austria on March 5-6. They are expected to agree on a deeper round of oil production cuts, in an effort to stabilize prices, although the scale of the reduction remains far from certain.

Some key members of the group, most notably OPEC kingpin Saudi Arabia, are thought to be pushing for an output cut of up to 1 million barrels per day (bpd). That’s significantly higher than the cut of 600,000 bpd initially proposed by OPEC’s joint technical committee. However, non-OPEC leader Russia has yet to sign off on this strategy.

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