Brent crude, international oil benchmark, dropped to $46 per barrel on Friday. The development followed the failed negotiations among the Organisation of Petroleum Exporting Countries and its partners.
The negotiation failed when leader of the 10 allies, Russia, bluntly refused to agree to a deeper crude production cuts plan. The plan was suggested to tackle the coronavirus’ impact on global oil demand, S&P Global Platts disclosed.
On Thursday, OPEC had revealed a plan to slash its production quotas by an additional 1 million barrels per day for the rest of the year, contingent on Russia and nine other non-OPEC allies agreeing to shrink theirs by 500,000 bpd.
But the Russian Energy Minister, Alexander Novak, remained firm in his stance that the coalition should wait until their June meeting to decide on any deeper production cuts.
According to the report, Russia’s stance has dismayed many OPEC members, particularly Saudi Arabia, which had been pushing for decisive action to instill market confidence in the alliance’s efforts to confront the demand destruction caused by the coronavirus outbreak.
Ministers spent Friday morning in a whirlwind of bilateral and multilateral discussions, delaying the official OPEC+ ministerial meeting from its scheduled 10 am start time for more than six hours.
Recall that Brent Crude slipped below the $50 per barrel mark after declining by as much as 3.85% at $49.74 per barrel. It fell as the Coronavirus pandemic continues to spread throughout the world whilst grounding some economies (like China) to a halt.
The decline in Brent Crude has also intensified speculation that the Organisation OPEC) and its allies may now have no choice but to quickly reach a decision on a new output cut that will support oil prices.