COVID-19

OPEC, Russia discuss large oil supply cuts in “demand emergency”

Scott Tong Mar 4, 2020
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Joe Klamar/AFP/Getty Images
COVID-19

OPEC, Russia discuss large oil supply cuts in “demand emergency”

Scott Tong Mar 4, 2020
Joe Klamar/AFP/Getty Images
HTML EMBED:
COPY

Since the first outbreak of the new coronavirus, oil prices have fallen more than 20%.

Today at an OPEC meeting in Vienna there was talk that OPEC and Russia might together cut the world’s supply of oil by one million barrels a day. Prices rose. Then, the Russians walked out of the meeting. Prices fell.

That’s a familiar drama, according to Bob McNally, founder of Rapidan Energy Group.

“There’s the old expression in Washington,” he said. “Make ’em sad, make ’em glad. And I think what you saw today is with the Russians leaving the meeting is positioning to, maybe, surprise the market.” The surprise would be a bigger cut than expected, to bring prices up.

There is some evidence that energy use in China has bottomed out and is coming back. Ports are busy, traffic has returned and pollution levels have gone up.

“Now, that’s overall a bad thing for mankind,” said Florian Thaler, who heads the analytics company OilX. “But what we are looking for is whether the industrial activity has started to pick up. Indeed, there has been a soft improvement.”

But in the U.S., oil use is sagging. It could sag more, said analyst Jacques Rousseau at ClearView Energy Partners.

“If they start canceling sporting events and conferences and such, this starts to add into less transportation fuels that’ll be consumed — both gasoline and jet fuel,” he said.

For now, OPEC and Russia are focused on Friday, when they could have a deal to respond to what some are calling an oil demand emergency.

COVID-19 Economy FAQs

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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