| 3.5°C Dublin

OPEC members sound price alarm as Saudis play Russian roulette

Close

Stock Image

Stock Image

Stock Image

While OPEC's de facto leader Saudi Arabia trades blows in a war for market share with Russia after their three-year pact to cut oil supplies collapsed last week, other OPEC states are already sounding the alarm over plunging prices.

Crude lost as much as a third of its value this week after Friday's meeting between OPEC and its allies, including Russia, ended in acrimony and led to scrapping all restrictions on output in a market already awash with oil.

Saudi capital Riyadh, the biggest OPEC producer, said it would hike its supplies to the market to a record high of 12.3 million barrels per day, about 2.6 million bpd above its current level. Russia said it would also pump more, even as the coronavirus hits demand.

Responding to the price plunge, OPEC's second biggest producer Iraq said flooding the market would not help producers.

Iraqi oil minister Thamir Ghadhban said his ministry "is in contact with members inside and outside OPEC to discuss ways to prevent deterioration in oil prices".

With most OPEC countries heavily reliant on oil income, the price rout puts a huge strain on state finances. At Monday's low of nearly $31 a barrel, OPEC members were estimated to be losing about $500m a day in revenues.

Algeria, this year's OPEC president, said on Monday that, following consultations with other producers, a "rapid decision to balance the market" was needed.

Crude prices recovered some ground on Tuesday, partly because Russia did not rule out more talks with OPEC. But, at about $37 a barrel, oil is still down 25pc on its level before Friday's talks and is down more than 40pc since January.

Nigeria's minister of state for petroleum Timipre Sylva told reporters that OPEC and non-OPEC countries might need to reconsider production cuts, adding that the sharp drop in prices may force a change in tactics.

Reuters

Irish Independent