OPEC, Allies Set to Debate Oil Cuts as Saudis Delay Pricing Move
April 05 2020 - 9:15AM
Dow Jones News
By Summer Said and Benoit Faucon
The Saudi-led Organization of the Petroleum Exporting Countries
will convene a virtual meeting on Thursday with other oil-producing
nations including Canada and Russia, aiming to negotiate a truce in
a Saudi-Russia fight for market share that has cratered oil prices
over the past month.
Saudi Arabia has delayed pricing its crude for May delivery as
it awaits the result of the meeting. The move represents a
cease-fire in a price war that has contributed to a 70% drop in oil
prices since early March, when Saudi Arabia and Russia split over
how to respond to a global coronavirus outbreak.
Delaying the pricing decision is an act of good faith from the
kingdom showing it wants to strike a deal but also a threat it
could resume the fight if talks fail, OPEC delegates said.
The collapse of production talks among Saudi Arabia, Russia and
their allies last month prompted the kingdom to slash its prices to
take market share from rivals. The 23-nation alliance led by Saudi
Arabia and Russia -- known as OPEC+ -- was due to revive talks on
Monday to consider cutting collective production by as much as 10
million barrels a day as the coronavirus pandemic continues to
erode oil demand. OPEC had hoped U.S. producers might join the call
but the virtual meeting was delayed by four days after Saudi Arabia
and Russia swapped barbs and the U.S. failed to outline production
cuts of its own.
Saudi Arabia and Russia have said privately they are unlikely to
cut oil output unless North American producers join in. Canada has
now signaled it would participate in the call this week. Alberta's
Energy Minister Sonya Savage will participate in the conference
call though it is unclear what it will decide, the province's
premier, Jason Kenney, said Friday.
"We are open to playing a role if there's a larger effort to
stop the madness," Mr. Kenney said. Alberta has already been
operating under government-mandated production quotas since last
year over pipeline constraints.
The U.S. has sent mixed messages over its course of action. Late
Saturday, President Donald Trump threatened to impose taxes on
foreign crude imports to protect his country's domestic oil
industry. "If we have to do tariffs on oil coming from outside or
something to protect tens of thousands of energy workers in our
great companies that produce these jobs, I will do what I have to
do," he told a press briefing.
Before his threat to impose tariffs on foreign producers, Mr.
Trump encouraged other nations to coordinate oil curbs. On
Thursday, he spoke to Russian President Vladimir Putin and Saudi
Crown Prince Mohammed bin Salman, saying a truce could be worked
out in the oil-price war between the two countries. The president's
tweet sparked a record-breaking 25% climb in oil prices.
Separately, Texas oil regulators are debating whether to impose
limits on the state's producers, though they won't decide until
April 14, five days after the OPEC virtual meeting.
Write to Summer Said at summer.said@wsj.com and Benoit Faucon at
benoit.faucon@wsj.com
(END) Dow Jones Newswires
April 05, 2020 09:00 ET (13:00 GMT)
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