Russia supports a recommendation to deepen OPEC+ global oil supply curbs to compensate for a drop in demand caused by the coronavirus, Foreign Minister Sergei Lavrov said on Thursday.
A technical panel that advises the Organization of Petroleum Exporting Countries (OPEC) and its allies led by Russia proposed a provisional cut in output of 600,000 barrels per day (bpd), three sources told Reuters earlier.
That is about 0.6 percent of global supply and would extend current curbs of 1.7 million bpd.
The OPEC+ group pumps more than 40 percent of the world’s oil.
“We support this idea,” Lavrov said when asked about the panel’s proposal at a news conference in Mexico City, according to a live translation of his comments into Spanish.
Lavrov said Russian President Vladimir Putin had recently spoken with the king of OPEC’s leader Saudi Arabia about the new virus, which has spread through China and beyond and sapped energy demand.
“Of course it will have some consequences for the oil market,” Lavrov said.
Lavrov said Russia was in consultations to determine which were the optimum measures for all market participants.
Russia’s support could pave the way for OPEC to bring forward to February a ministerial policy meeting planned for early March to formalize the decision.
The Joint Technical Committee (JTC), the panel that recommended the cut, is a non-decision-making body that advises the oil producer group.
Earlier, the sources said the panel was awaiting Russia’s final position on the proposal and that ministers would not change the meeting date if there was no agreement on further supply cuts.
The panel had extended its meeting into a third day on Thursday after Russia signaled a preference for an extension of current cuts rather than deeper cuts, one source said on Wednesday.
In previous years, Russia has regularly signaled opposition to OPEC before ultimately agreeing on policy during formal meetings.
Russian Energy Minister Alexander Novak said on Tuesday he could not say for sure whether it was time to tighten output further.
Saudi Arabia has been voluntarily holding its output to 400,000 beneath its quota, bringing the total effective OPEC+ cuts to 2.1 million bpd.
The OPEC+ JTC has also recommended extending current output cuts of 2.1 million bpd until the end of 2020, two sources said. The current OPEC+ agreement expires in March.
One OPEC source said the proposed output cut of 600,000 bpd, if agreed by all members, will start immediately and continue until June.
“The 600,000 bpd has taken into consideration the expected return of Libya oil production and all scenarios for oil demand growth,” the source said, adding that the proposed cut was enough to counter the expected drop in oil demand due to the coronavirus.
Oil prices have fallen by more than $11 a barrel this year to $55, alarming producers.
Saudi Arabia and other OPEC members are worried that the continued spread of the virus could hit oil demand and prices further, the sources said.
The economic slowdown resulting from the virus outbreak is expected to reduce 2020 global demand growth by 300,000-500,000 bpd, or roughly 0.5 percent, BP Chief Financial Officer Brian Gilvary said on Tuesday.
Brent crude futures lost 35 cents to settle at $54.93 a barrel. US West Texas Intermediate (WTI) crude futures rose 20 cents to settle at $50.95 a barrel.