Russia is delivering a sobering lesson in patience and the limits of influence to OPEC kingpin Saudi Arabia as the cartel and its allies gather in Vienna for a two-day meeting kicking off Thursday to agree – or not – on how to respond to the spreading coronavirus outbreak.
In the weeks leading up to the gathering of the Organization of Petroleum Exporting Countries (OPEC) and its allies, a grouping known as OPEC+, the Saudis have reportedly pushed for an extension of existing output curbs as well as additional cuts of more one million barrels per day (bpd).
So far though, Russia – OPEC’s most crucial ally – has remained cagey about its willingness to sign on to that strategy.
On Tuesday, the group’s technical panel recommended a cut of 600,000 bpd to one million bpd as well as an extension to the end of 2020 current 2.1 million bpd curbs.
“If the cartel surprises to the upside, we might see a bit of relief for oil producers,” Jim Krane, energy analyst at Rice University’s Baker Institute, told Al Jazeera. ” If the Saudis can’t bring Russia on board, expect the depredations to continue.”
Prices of benchmark Brent crude are down around 20 percent this year, as concerns mount over how the coronavirus could dent global energy demand and exacerbate an existing supply glut.
Earlier this week, Russian President Vladimir Putin indicated that he is open to extending current production curbs which OPEC agreed to in December and are set to end in March. But Putin also said Russia is in no rush and could withstand a drop in crude prices.
That is bound to frustrate the Saudis given that the International Monetary Fund reckons the kingdom needs oil to trade at $82 to balance its state budget. Meanwhile, Moscow needs crude to fetch around $42 a barrel to break even.
On Wednesday, Brent crude was trading at $52.08 a barrel.