Russia will support deeper oil production cuts across OPEC and its partners, Foreign Minister Sergey Lavrov told media at an event in Mexico.
"We support this idea," the top diplomat said, adding that President Putin had recently discussed the coronavirus outbreak with the King of Saudi Arabia.
"Of course it will have some consequences for the oil market," Lavrov said.
Yesterday, sources from the oil cartel told Reuters that the joint ministerial panel overseeing the current cuts had recommended adding 600,000 bpd to the total in response to the oil price flop that followed the coronavirus outbreak. Russia, the source said then, was against additional cuts, but supported an extension of the current ones.
Currently, the production cuts are around 2.1 million bpd after Saudi Arabia willingly cut its production more than it had committed to, adding 400,000 bpd to its cut quota. This means that with another 600,000 bpd off the market, the effective cuts could reach 2.7 million bpd at full compliance. They could also last until the end of the year if the group agrees to extend them beyond March - something that would be easier to agree on with Russia.
According to OPEC sources, the decision to recommend these additional cuts took into account not just the weaker demand following the Chinese outbreak, but also a return of Libya's production on the market at some point this year.
"The 600,000 bpd has taken into consideration the expected return of Libya oil production and all scenarios for oil demand growth," the source told Reuters.
The news about Russia backing the additional cuts was positive for prices, but not by much at the time of writing. The full effect of the development should become evident later today, but it may turn out to be more limited than OPEC+ is hoping for as concern about the coronavirus outbreak continues to trump any positive news for oil.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More