Oil price dives as OPEC, Russia fail to agree on output cut

Oil price dives as OPEC, Russia fail to agree on output cut vanguardnews

OPEC and key ally Russia failed to agree Friday on a cut to oil production that would have contained the plunge in the price of crude caused by the new coronavirus outbreak’s massive disruption to world business.

The unraveling of the talks in Vienna also underscores the limited power of the cartel to influence world energy markets, unlike its heyday in the 1970s. The United States recently became the world’s biggest oil producer and keeps on pumping at full capacity. Russia and other non-OPEC countries have been working with the cartel in recent years and agreed on earlier cuts. However, Russia can tolerate low oil prices better than Saudi Arabia can and appears reluctant to slash output of its main revenue-making export.

“There is still too much uncertainty regarding the amount of demand destruction,” analysts at research firm Petromatrix said in a note to investors. The international benchmark for crude oil fell $4.72 to settle at $45.27 a barrel on Friday. It had been trading over $50 in recent days, and is down from $69 as recently as early January, before the outbreak.

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