Global oil powers close in on historic deal to curb output

Bloomberg

The world’s largest oil producers are hammering out the terms of an unprecedented deal to mitigate the devastating impact of the coronavirus crisis as they prepare for an extraordinary meeting this week.
Saudi Arabia and Russia are closing in on an agreement to curb output, which could drain some of the oil surplus threatening to overwhelm storage tanks and force a wave of abrupt production shutdowns, according to delegates involved in the talks. The two energy giants, together with others in the Opec+ alliance, will hold a virtual meeting on Thursday to finalise the accord.
A deal still hinges on some form of co-operation with the US. That may be difficult to achieve with President Donald Trump resisting any partnership with the Opec cartel that he’s vilified for years. But the group is holding out hope for some kind of American involvement, and buy-in by others such as Canada and Brazil, at a gathering of Group of 20 oil ministers scheduled for Friday.
“Nobody’s asked me, so if they ask I’ll make a decision,” Trump said on whether the US would participate in cutbacks. US producers are “already cutting back and they’re cutting back very seriously. I think it’s happening automatically.”
The Organisation of Petroleum Exporting Countries and its allies are set to meet by video conference at 4 pm Vienna time on April 9. Russia and Saudi Arabia are likely to curb their production significantly, said people familiar with the negotiations, but that could depend on the participation of other major producers in a global deal.
The G-20 meeting the next day may be a more politically-palatable forum for the US, Canada and Brazil. The video conference is scheduled to start at 3 pm Riyadh time and last for about 2 1/2 hours, according to a diplomat involved.
A final global deal could pare supplies by 10 million barrels a day or more, a level Trump first invoked last week. However, even that amount may only dent the supply glut, which is estimated at as much as 35 million barrels a day.
Crude prices have tumbled by around 50% this year, as the economic effects of the coronavirus pandemic have knocked out about a third of global demand. The price crash is so dramatic that it’s threatening the stability of oil-dependent nations, the existence of US shale producers, and poses an extra challenge to central banks.
Industry officials say that if a deal to cut supply in an orderly way isn’t reached, the market will simply force producers to slash output as storage space runs out.