The coronavirus (nCoV) outbreak might spill over to impact oil demand with OPEC (Organization of the Petroleum Exporting Countries) and its allies mulling another 500,00 barrels per day (bpd) output cut, according to media sources.
The OPEC +, as the organisation and its allies including Russia is known, might meet on Feb 14-15 ahead of the scheduled meeting in March, Reuters quotes a source inside the organisation as saying. Russia, which is the biggest non-OPEC producer working with OPEC, on Friday released a statement saying it was to meet to February.
According to other sources, a Joint Technical Committee (JTC) has scheduled a meeting for Feb. 4-5 in Vienna to assess the impact of the virus on demand and might make recommendations on any further action needed to support the market.
The oil supply has already been reduced to support prices, with OPEC + meeting in December last year decided to cut output by 1.7 million bpd until the end of March. With oil already having fallen to US$56 ($10 a barrel drop) this year so far, the coronavirus outbreak in China threatens to cut oil demand by more than 250,000 bpd in the first quarter, according to experts in the field.
Iran has already made a statement that the spread of the virus had hit oil demand and called for effort to stabilise prices. The country’s official news agency IRNA quoted Iran’s oil minister saying, “The oil market is under pressure and prices have dropped to under $60 a barrel and efforts must be made to balance it.”
The coronavirus, which originated in the Wuhan Province in China, was declared a global public health emergency by the World Health Organisation and is said to have infected about 8,000 people worldwide — the greatest share in China — and has killed at least 170. There are also about 12,200 suspected cases of 2019-nCoV under investigation, according to WHO.
Meanwhile, the OPEC price basket of fourteen crudes stood at at US$58.94 a barrel on Friday, 31st January, compared with $58.80 the previous day, according to OPEC Secretariat calculations. The OPEC Reference Basket of Crudes is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Djeno (Congo), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).