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Saudi Arabia seeks OPEC oil supply cuts amid coronavirus concerns

Oil markets have been tumbling due to the coronavirus outbreak [Getty]

Date of publication: 12 February, 2020

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As China's coronavirus epidemic negatively affects oil markets, Saudi Arabia and other OPEC members seek a reduction in oil supplies.
Saudi Arabia is working to persuade fellow oil producers to agree to a swift oil supply cut as China's coronavirus epidemic takes its toll on demand, according to media reports on Tuesday.

Citing "sources familiar with the kingdom's thinking", Reuters reported that Riyadh has been trying to convince producers and allies of the Organisation of the Petroleum Exporting Countries (OPEC) - known as OPEC+ and led by Russia - to act sooner rather than later.

An OPEC source told the news agency the Saudis aim to keep oil prices at $60 a barrel or above.

OPEC members and Russia previously considered cutting oil output at a meeting in Vienna due to the coronavirus epidemic. 

China's position as the second biggest economy and a large consumer of crude - as well as the origin of a deadly illness outbreak - presents a cause for concern for Saudi Arabia.

Riyadh sees a potentially bigger impact on oil demand than the 2002-2003 Severe Acute Respiratory Syndrome (SARS).

Oil prices have fallen by more than $11 a barrel to $54 this year, as the coronavirus continues to spread.

This year's coronavirus epidemic has killed over 1,000 people in China alone. The 2003 SARS outbreak caused 774 deaths worldwide.

Almost all OPEC members have supported the proposed cut in supply, including Venezuela and Iran, which have previously dissented from de facto OPEC leader Saudi Arabia on supply policy, according to Reuters, although Russia is yet to take a firm position on the proposal.
 

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