OPEC: Negotiations to Reduce Oil Supply Fail, Oil Prices Drop

Due to the decline in global oil consumption caused by the Covid-19 epidemic, the Organization of Petroleum Exporting Countries (OPEC) Friday proposed to cut oil supplies by 1.5 million barrels per day until the end of 2020. This proposal, however, was not accepted due to the resistance of Russia and Kazakhstan.

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This adjustment, which represents about 1.5 percent of world production, was proposed during the OPEC meeting in Vienna, Austria.

On the first day of this event, OPEC ministers urged their partners to decrease production, as the Covid-19 epidemic has cut oil prices by more than 20 percent since the early days of 2020.

"Demand is falling. Economic uncertainties continue to increase as the epidemic of viral pneumonia spreads around the world," the OPEC warned.

OPEC member countries expect the Vienna meeting to result in a decision to reduce production, which may not happen if Russia maintains its resistance to decrease its oil activity.

This new cut would be added to others that came into force in Oct. 2018. Therefore, the total reduction would amount to 3.6 percent of the world's oil supply, the lowest decline since the 2008 financial crisis.​​​​​​

On Friday, once it was known that OPEC would not reduce its energy supply, oil prices fell by 8 percent in the most important international markets.