OPEC in waiting game with Russia for output response to Wuhan virus

London — OPEC remains hostage to Russia's reluctance, with plans still in limbo on instituting deeper production cuts to ward off the Wuhan coronavirus' impact on oil prices.

Moscow has yet to inform its OPEC partners whether it will commit to new cuts that were recommended by an advisory committee last week, several delegates told S&P Global Platts on Monday.

The recommendation calls for the alliance of OPEC, Russia and nine other countries to tighten production quotas by 600,000 b/d through the second quarter -- more than a third greater than the current 1.7 million b/d cut accord already in place, which should be extended through the end of the year.

Saudi Arabia, in particular, has been pushing for new cuts to combat the expected hit to global demand from the outbreak.

Russia is still studying the proposal, with energy minister Alexander Novak having said last week the effects of the coronavirus were still too uncertain.

The coalition, known as OPEC+, is next scheduled to meet March 5-6 in Vienna, but has been awaiting Russia's green light to move the meeting forward to as soon as this week so that the cuts could be implemented without further delay.

Any deal would require unanimous approval by all 23 members of the coalition.

Parviz Shahbazov, the energy minister of Azerbaijan, a member of the OPEC-led producer group and a close Russian ally, said Sunday that an early OPEC+ meeting "most likely won't happen," Russia's Prime News Agency reported.

Azerbaijan's finance minister, Samir Sharifov, said there was no reason to panic over the oil price plunge.

"I do not think we need to take hasty steps," he was quoted by Prime as saying. "We have enough foreign exchange reserves and, if necessary, are ready to respond to undesirable shocks."

Consensual solutions

Concerns that the outbreak, which was first revealed in early January, could blunt global crude demand have pushed oil prices sharply lower in recent weeks. Front-month ICE Brent futures were trading at $53.52/b at 1650 GMT, down 20% year to date.

OPEC will release its latest monthly oil market report on Wednesday, which should provide the bloc's latest analysis of the coronavirus impact. The International Energy Agency will issue its monthly oil market report on Thursday.

Algeria's energy minister Mohamed Arkab, who also holds the rotating OPEC presidency for this year, said in a statement he supported the committee's recommendation and would be consulting with OPEC+ members "to seek consensual solutions, on the basis of the [committee proposal] to rapidly stabilize the oil market and deal with the current situation".

"The situation is clear; it requires corrective action in the interest of all," Arkab said.