OPEC and its allies are “considering cutting their oil output by a further 500,000 barrels per day (bpd)” with eyes on mitigating the impact on oil demand from the coronavirus, Reuters and the WSJ report.
The so-called OPEC+ group are set to meet Tuesday and Wednesday this week “to debate possible action after the outbreak in China, the world’s largest oil consumer, led to the biggest monthly crude-price drop in 30 years,” the WSJ notes. “Under one scenario, Saudi Arabia, OPEC’s kingpin, would lead a collective reduction of 500,000 barrels a day that would stand until the crisis is over, cartel officials said.”
“Another option being considered would involve a temporary cut of 1 million barrels a day by the Saudis to jolt oil markets,” the officials told the WSJ.
China’s oil demand amid the coronavirus outbreak is likely inflicting the worst oil demand shock to markets since the financial crisis of 2008-2009, OilPrice.com reports.
Chinese demand may plunge by 20 percent compared to the typical demand for the season.