Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman has defended the strength of the Organisation of the Petroleum Exporting Countries (OPEC) and its ability to react to the recent slump in oil prices caused by the Covid-19 epidemic.
Speaking to reporters outside the ICCUS conference in Riyadh the prince said: “We do communicate with each other, we use every opportunity to talk with each other. We do not run out of ideas; we haven’t lost our phones and there are always good ways of communicating through conference calls and technology is very helpful.”
Reports of disquiet within the organisation and with its ally Russia have emerged in recent weeks. OPEC was expected to agree to cut output yet further in response to the crisis in order to buoy oil prices. It is understood that Russia was unwilling to commit to such a plan. However, with the situation intensifying, the consortium and its allies are expected to set out a strategy when they meet in Vienna on March 5-6.
The coronavirus outbreak has ravaged global commodity markets and indices in recent weeks. With more than 80,000 confirmed cases and around 2,600 deaths, the virus has spread from its epicentre in Wuhan China around the world, with recent spikes in Iran, Italy and South Korea.
Only one month ago Prince Abdulaziz bin Salman dismissed the initial drops in global oil prices triggered by the outbreak as “primarily driven by psychological factors and extremely negative expectations adopted by some market participants, despite its very limited impact on global oil demand”.
Within a fortnight of his comments, both Brent and WTI crude oil futures had fallen to 12-month lows of $53.27 and $49.57 per barrel. The widespread shutdowns of major Chinese cities not only upset Chinese demand for natural resources but impacted global supply chains.
A brief rally in the third week of February has been dashed by the latest reports of the virus’ spread beyond China to Europe and the Middle East. Oil prices slumped by more than 4 per cent when trading restarted on Monday.
In mid-afternoon trading both Brent and WTI have recovered from late-morning dips to trade up 0.11 and 0.18 per cent respectively, at $56.36 and $51.52 per barrel.