VIENNA (AP) — The price of oil is slumping amid doubts that OPEC will succeed in agreeing with ally Russia on cutting production to support prices as the virus outbreak disrupts the global economy.
The cartel is trying to convince Russia and other non-member producers to join in deep production cuts to prevent weak oil prices from falling even further.
Russia’s energy minister, Alexander Novak, entered the OPEC headquarters without answering journalist’s questions as officials prepared to take up the cartel’s proposal to cut output by 1.5 million barrels a day, of 1.5% of world production.
OPEC countries like Saudi Arabia and Iran say they need non-member allies to take 500,000 barrels of that cut on themselves.
Analysts say OPEC may struggle to keep oil prices from falling further as it remains unclear how much the turmoil in the global economy will affect the need for energy.
“There is still too much uncertainty regarding the amount of demand destruction,” analysts at research firm Petromatrix said in a note to investors.
The international benchmark for crude oil fell more than 4% to $47.89 on Friday. It had been trading over $50 in recent days, down from $69 in January before the outbreak.
The spread of the coronavirus has sharply reduced air travel and thus the demand for fuel, while industry in China, the world’s second largest economy, has been severely disrupted through shutdowns and travel restrictions.
Some economists think the global economy may shrink in the first quarter for the first time since the financial crisis, sapping demand for energy.
Oil production in the U.S., which is not part of OPEC and unlike Russia does not cooperate in its output decisions, has ramped up in recent years, flooding the market and keeping prices down.