OPEC and its allies failed to reach a deal on oil production cuts on Friday after Moscow refused to tighten supply to counter the effects of the coronavirus outbreak.
The day before, OPEC ministers had recommended reducing output by 1.5 million barrels per day in face of the global slowdown caused by the epidemic and the resulting fall in demand for oil.
But the decision hinged on agreement from the so-called OPEC+ grouping — Russia foremost among them.
And on Friday, Russian Energy Minister Alexander Novak said that the talks between OPEC and his OPEC+ grouping had failed to bring about a deal.
“Regarding cuts in production, given today’s decision, from April 1, no one — neither OPEC countries nor OPEC+ countries — are obliged to lower production,” he told reporters after the meeting.
OPEC’s Secretary General Mohammed Barkindo said the meeting had been adjourned, although consultations would continue.
“At the end of the day, it was the general, painful decision of the joint conference to adjourn the meeting,” he told reporters.
“We have some few knotty issues, but the norm is here to have everybody on board, unanimity.”
Prior to the meeting’s official start, ministers from the bloc’s kingpin Saudi Arabia, the world’s number three oil producer, and Russia, the number two, had huddled for hours of bilateral discussions.
But as news of a “no deal” began to seep out, oil prices plunged more than seven per cent, with Brent North Sea crude tumbling to $46.14 per barrel and WTI to $42.26.
– OPEC+ dead? –
Earlier, Oanda analyst Edward Moya had suggested that a failure to reach an agreement could spell the end of OPEC+.
“No-deal OPEC+ means the three-year experiment is over. OPEC+ is dead. The Saudis are all-in on stabling oil prices and they may need to do something extraordinary,” he said.
According to the plan drawn up by OPEC, allies in the so-called OPEC+ grouping would have taken on 500,000 barrels of the cuts.
OPEC wanted the proposed cuts to run until the end of 2020.
Producers had already had to contend with abundant supplies weighing on prices, but in recent weeks the spread of COVID-19 across the world has sent prices plunging.
The 23 producers, who gathered at the Vienna-based headquarters of the Organization of Petroleum Exporting Countries, have since early 2017 tried to support prices through cuts on production, initially of the order of 1.2 million barrels per day.
In December, they announced a further 500,000 barrel cut with Saudi Arabia adding a “voluntary” contribution of 400,000 barrels.