The OPEC oil cartel is calling for a deep production cut to keep crude prices from falling further as disruption to global business from the coronavirus slashes demand from air travel and industry.
Oil ministers from the 14 OPEC countries decided at a meeting Thursday to push for a cut of 1.5 million barrels a day, or about 1.5% of total world supply.
OPEC’s move appears aimed at keeping prices roughly where they are by preventing a further decline. Lower prices can help consumer demand, particular in the United States, by putting more cash in consumer pockets to consume other goods. They have less impact on drivers in Europe, where higher taxes are the main component in fuel prices.
It remains unclear, however, whether that can stabilize a market as demand is falling sharply because of the virus outbreak’s impact on businesses around the world.
Since the outbreak began in China last month, air travel to the country — the world’s second-largest economy — has all but stopped, sapping demand for aviation fuel. Manufacturing output fell sharply as cities with millions of residents locked down to contain the spread of the virus. That has caused chaos for industries around the world, and major companies have halted business travel out of precaution.
The OPEC proposal calls for its members to cut output by 1 million barrels a day, with another 500,000 barrels to be cut by non-member allies, like Russia, who have been coordinating production measures with the cartel in recent years. Members and non-members will meet Friday to decide.
Russia’s agreement is not certain, however.
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