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OPEC rift widens as group fails to set date for emergency talks

Published 31/03/2020, 17:14
© Reuters. The logo of the Organisation of the Petroleum Exporting Countries (OPEC) sits outside its headquarters in Vienna
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By Vladimir Soldatkin, Ahmad Ghaddar and Alex Lawler

MOSCOW/LONDON (Reuters) - A rift in the Organization of the Petroleum Exporting Countries (OPEC) has widened after members failed to agree unanimously on an emergency low-level meeting to discuss a market collapse that has seen global oil prices hit 18-year lows.

OPEC president Algeria, which has been instrumental in organising the producer group's efforts to support the market, had been among the members pushing for a gathering of OPEC's Economic Commission Board (ECB) in April.

But at least four members, including OPEC's de facto leader Saudi Arabia, the United Arab Emirates, Kuwait and Nigeria, have made clear they see no need for such a meeting, four sources with knowledge of the matter said on condition of anonymity.

One OPEC source said Kuwait had not received an official invitation to join the meeting, and does not consider a meeting necessary.

Another OPEC source said it was best to stick to a previous arrangement to hold the ECB meeting in June rather than earlier given the extent of uncertainty over the market's direction.

The meeting could be agreed by a simple majority of OPEC's 13 members, but the absence of leading nations, notably Saudi Arabia, would mean the meeting had no power to act. The Kingdom accounts for a third of the group's oil output.

The ECB is an advisory panel made up of OPEC officials, usually national representatives. It does not set policy, but its recommendations can inform decisions made by ministers.

The lack of agreement on holding a low level meeting highlights the growing frustration on the part of some OPEC members with the Saudi policy of taking no action to halt the fall in oil prices as it battles for market share with non-OPEC Russia.

"You cannot freeze all channels of communication, even at the lower level," one of the sources said.

Oil prices (LCOc1) have lost around 70% of their value since a peak this year, and nearly 60% since a meeting of OPEC and its allies, known as OPEC+, at the start of the month, which failed to agree to extend an existing pact on oil output cuts.

As a result, the three-year old deal, which had led to the withholding of 2.1 million bpd of oil production, mostly from Saudi Arabia, ends on Tuesday.

From April 1, producers, including Saudi and the United Arab Emirates, say they will produce at maximum capacity.

But with the novel coronovirus spread globally keeping 3 billion people in their homes, oil demand is disappearing fast. Some in the industry estimate it will fall by around a third from its levels of around 100 mln bpd last year.

© Reuters. The logo of the Organisation of the Petroleum Exporting Countries (OPEC) sits outside its headquarters in Vienna

Global oil prices rallied on Tuesday from 18-year lows after U.S. President Donald Trump and Russian President Vladimir Putin agreed during a phone call on Monday to ask their top energy officials to discuss slumping global oil markets.

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