Members of the Organisation of the Petroleum Exporting Countries (OPEC) have put a deal to other countries to further cut oil production throughout 2020. However, Russia has not agreed, and oil prices continue to plummet, losing more than 4% on Friday.
According to figures from Reuters, at 11:24 UTC Brent crude prices had fallen by $2.41 per barrel. The 4.8% fall leaves Brent on $47.58 per barrel. West Texas Intermediate (WTI) was down by 4.7%, falling $2.19 to $43.71.
On Thursday, Brent oil prices closed at their lowest point since mid-2017, due to the demand impact of coronavirus.
Members of OPEC had previously planned supply cuts until the end of March. Earlier this year, the group agreed to continue cuts until June.
At a summit in Vienna, OPEC members agreed to the concept of further extending cuts by 1.5 million barrels per day (MMbpd) until the end of the year. Member countries decided to proceed with cuts if non-OPEC members, Russia being the most notable, took a 0.5MMbpd share.
Members then put their suggestions to non-OPEC members, but Russia refused. As a result, OPEC applied pressure by threatening to abandon its own cuts. This would keep prices low, meaning Russia would not profit from maintaining production levels.
Petromatrix consultant Olivier Jakob said: “What counts really is what Saudi Arabia does. If Russia joined, it will not add substantially. We need to see if OPEC goes ahead all alone.”
At time of publication, an agreement had not been reached. If all discussed cuts go ahead, it would result in global oil supplies falling by 3.6 MMbpd.
Investment firm Goldman Sachs said new cuts would still not stop an oil surplus in Q2 2020. It forecasts a $45 Brent price in April.
In its meeting OPEC members acknowledged 2020 oil demand growth is forecast to be 0.48 MMbpd, down from the 1.1 MMbpd prediction made in December 2019.