OPEC+ Seeks Even Bigger Output Cuts As Momentum To Re-Open Businesses Heats Up

Governments' measures to combat the coronavirus are being reassessed: File Image/PixaBay

Although no crude trading was conducted on Friday due to the Easter holiday, several events occurred that could well influence price early next week - including the disclosure that Russia anticipates oil cuts of 5 million barrels per day (bpd) in addition to the cuts recently agreed upon by the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

The disclosure was made by Alexander Novak, energy minister for the former Soviet Union, who on Friday told Russian state television that "We believe that, in addition to the 10 million bpd which was undertaken by OPEC+, there would be another 5 million bpd from oil producers outside of OPEC+."

He added that Canada was ready to cut oil output by around 1 million bpd.

For the additional 5 million bpd to be cut, Mexico would have to participate in the reductions - and on that score Russia and Saudi Arabia on Friday were expected to pressure that country into sealing the OPEC accord (Mexico on Thursday balked at the suggested production cuts).

This may presumably be good news to critics who last week complained that the 10 million bpd cut was not enough to offset the global collapse of demand caused by world governments' shutting down economies in an effort to slow the spread of the coronavirus.

Moreover, Tina Bru, minister of petroleum and energy for Norway, told media on Friday that her country may cut its 1.75 million bpd output if the OPEC deal is carried out as planned.

As for the element driving these unprecedented measures - the coronavirus - worry over the stalled economy is gradually eclipsing worry over the disease, which to date has killed 102,136 people globally, about half the number that die from malaria annually and a fraction of those who die from HIV/AIDS - a disease for which there remains no vaccine.

These circumstances caused U.S. president Donald Trump on Friday to announce an "Opening our Country" task force on April 14 comprised of doctors and business leaders.

Faced with 16.8 million Americans who have lost their jobs due to the shutdown, Trump said reopening the economy amid the pandemic would be "the biggest decision I've ever had to make."

The initiative is supported by multiple signs the virus is reaching its peak, by death toll forecasts that  turned out to be wildly overestimated, and by reports on Friday such as a 250 bed emergency field hospital built inside a Seattle convention center to alleviate overcrowded hospitals that is being dismantled without treating a single patient.

The ramp up in talk of reopening the economy is also driven by countries such as Sweden, which has steadfastly refused to enact a lockdown and as a result has experienced only 9,141 cases of infection and 793 deaths out of a population of 10.2 million, according to John Hopkins University figures.

Anders Tegnell, the country's state epidemiologist, said, "So far Swedish health care is handling this pandemic in a fantastic way."