Russia is prepared to undertake significant cuts to its oil production, according to two Russian sources who spoke to Reuters on Monday. The markets are hanging on every word from Saudi Arabia, Russia, and the United States about who is prepared to do what, for how long, and with what conditions.
Oil markets were largely trading down on Monday after OPEC over the weekend postponed the emergency meeting originally scheduled for today at the behest of the United States for later in the week. Although both Saudi Arabia and Russia have signaled its continued intent to curb oil production, the actions spooked markets.
At 1:05pm EDT, WTI was trading down 6.21% at $26.58, with Brent crude trading down 3.96% at $32.76. Both benchmarks are still up significantly week on week on the news that Russia and Saudi Arabia might finally be coming to their senses and reign in their oil production that far exceeds demand.
OPEC+ is now scheduled to hold a videoconference on Thursday this week to discuss the markets. Potential production cut figures between 10 million bpd and 15 million bpd have been thrown out as possible by Russia, Saudi Arabia, and the United States, although it is for the most part understood that even those massive figures may not be enough to offset the drop in demand due to Covid-19 that some say is more than 20 million bpd.
Until late last week, Saudi Arabia was determined to continue over producing, at over 12 million barrels per day at a time when the coronavirus is sapping the demand out of the market. A handful of other producers followed suit in an effort not to lose market share. But as reality set in that the virus was interrupting demand more than the producers thought possible, cooler heads appear to be prevailing.