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Russia: Coronavirus impact on oil is worse than expected


Russia continues to refuse to announce its position regarding deeper cuts by the OPEC+ coalition, but admitted that the coronavirus outbreak could lead to additional downward revisions to the global oil demand growth outlook for 2020.

Russia: Coronavirus impact on oil is worse than expected

The spread of the coronavirus outside China could lead to further downward revisions to global oil consumption, Russia’s Energy Minister told reporters in Moscow on February 27, Oilprice reported.

The outbreak has already reached Europe, and forecasts will definitely correlate to this, Novak told TASS, replying to a question whether Russia maintains its forecasts of the coronavirus impact on oil consumption.

Novak earlier referred to analyst forecasts that the outbreak would reduce oil demand by 150,000 bpd-200,000 bpd in 2020, according to TASS.

While Russia admitted that the hit to demand could be more than this estimate, Moscow continues to drag its feet and avoids a direct reply to a proposal for deeper OPEC+ production cuts to counter the demand loss from the coronavirus.

Speaking to reporters today, Novak again declined to answer a question about Russia’s position regarding deeper cuts, but praised Russia’s partnership with Saudi Arabia, days after the Saudi Energy Minister Prince Abdulaziz bin Salman had also tried to reassure the market that there isn’t any rift between the two leaders of the OPEC+ group.

Russia and Saudi Arabia have never had disagreements about the deal, TASS quoted Novak as saying on February 27.

“We are very satisfied with the cooperation with our Saudi partners, we want to continue our cooperation not only within the OPEC+ format, but also in bilateral relations,” Novak told reporters today.

OPEC and its Russia-led non-OPEC partners are meeting at the end of next week in Vienna to discuss how to handle the demand loss from the coronavirus in an already oversupplied market. The rout in oil prices in recent days may convince all partners, including Russia, that it’s in the coalition’s best interest to show unity and decisive action in their response to the demand destruction.

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