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OPEC seeks 1.5% global oil production cut

Albert Otti and Fabian Nitschmann
OPEC wants to cut global oil supplies as the world economy suffers from the effects of coronavirus

Oil exporters should join forces to reduce global supplies by about 1.5 per cent in the first half of this year, as the world economy suffers from the effects of the coronavirus outbreak, the OPEC oil cartel has proposed in Vienna.

However, the Organisation of the Petroleum Exporting Countries has yet to win agreement from a Russia-led group of 10 additional allied countries that will join talks on a possible output cut on Friday in the Austrian capital.

OPEC's oil ministers agreed that they are willing to reduce their oil production by 1 million barrels per day (bpd), while asking the non-OPEC group for a cut of 500,000 bpd, for a total of 1.5 million bpd.

"The COVID-19 outbreak has had a major adverse impact on global economic and oil demand forecasts in 2020," OPEC said in a statement.

The cartel has revised its global oil demand growth projection for this year from 1.1 million bpd to 480,000 bpd.

Worries about the effects of the outbreak have also sent oil prices downhill since January.

Algerian Energy Minister Mohamed Arkab, who chaired the talks on Thursday, said that "complex challenges require collegiality and concerted action".

Any production cuts that are decided this week would come on top of of previous reductions that OPEC and its allies - jointly known as "OPEC Plus" - have been put in place in recent years to shore up prices.

However, Russia has been resisting any additional production curbs, according to Carsten Fritsch, an energy analyst at Commerzbank in Frankfurt.

"Uncertainties about the outcome of the 'Opec Plus' meeting puts oil prices under pressure," he wrote in a market commentary.