VIENNA, Austria--OPEC pushed on Thursday for a bigger-than-expected oil output cut to support prices that have been hit by the coronavirus outbreak, effectively presenting its non-OPEC partners with an ultimatum to back the move or face a price collapse.
OPEC's proposal to curb supplies by an extra 1.5 million barrels per day (bpd) until the end of 2020 was a surprise, given the group was expected to propose cuts of 1 million bpd and, hours earlier on Thursday, had said curbs should be limited to the second quarter.
But an unusual informal meeting of OPEC ministers in a Vienna hotel on Thursday evening announced that the group now wanted the cut - already the biggest since the 2008 financial crisis - to run until the end of year. Russia and Kazakhstan, both members of the broader grouping known as OPEC+ which meets in Vienna on Friday, said they had not yet agreed to a deeper cut, raising the risk of a collapse in cooperation that has propped up crude prices since 2016.
OPEC+ already has a deal in place for 2.1 million bpd of cuts. OPEC said after Thursday's formal ministerial meeting that the market faced an "unprecedented situation" as efforts to stop the coronavirus spreading has driven down demand for oil by dampening economic activity around the world.
Riyadh, OPEC's biggest producer, has been pushing for a significant cut to lift oil prices that have tumbled 20% since the start of year. But it has struggled to win over Moscow. Russian Finance Minister Anton Siluanov said on Thursday he was ready for a drop in oil prices if there was no deal. Kazakh Energy Minister Nurlan Nogayev, another non-OPEC producer, said talks were only focusing on extending existing curbs to June.
"Moscow perhaps is underestimating that Saudi Arabia may be ready to walk away if it doesn't get a positive answer," said Amrita Sen, co-founder of Energy Aspects think-tank.
Russia has been hesitant in previous negotiations and has then signed up to deals at the last minute. But OPEC sources have said negotiations with Moscow this time have been tougher. Two OPEC sources said on Thursday that, if Russia failed to sign up, there was a risk Saudi Arabia would insist on scrapping OPEC production limits altogether.
