Oil drops further as Opec, Russia fail to agree to sharp supply cuts

Coronavirus has proved mightier than the 14-member oil producer group after a decision by the group to cut production by 1.5 million barrels per day (bpd) through the second quarter of the year failed to boost oil prices. Instead, prices have fallen on fears of a larger economic slump in the wake of rising cases of COVID-19 across the world.

And, with Russia not backing the Opec call for extra oil output cuts, the oil cartel would need deeper reductions to cope with the coronavirus outbreak. Russian sources, however, the country would agree only to extending existing curbs, 
“That position won’t change,” the high-level Russian source told Reuters as ministers from OPEC, 
The oil cartel led by Saudi Arabia, proposed production cuts, which, however, would be conditional on approval from Russia. However, with the failure of OPEC+’s Vienna talks, the Opec production cut is unlikely to prop up falling oil.
US benchmark West Texas Intermediate (WTI) crude futures were down 1.3 per cent at $45.31 by 12:30 Eastern Time. North Sea Brent oil futures also lost 1.3 per cent at $49.33 a barrel.
On Thursday, oil prices reversed early gains to move lower. Benchmark North Sea Brent crude fell below the key $50 level, sliding 2.4 per cent to $49.93, while US West Texas Intermediate fell 88 cents, or 1.88 per cent, to settle at $45.90 per barrel.
Opec said it would review the policy at its next meeting on 9 June.
Speaking shortly after the Opec meeting on Thursday, Iranian oil minister Bijan Zanganeh said Tehran would remain exempt from the proposed reduction. Iran, although an Opec member, is subject to Western sanctions.
Market expects the economic impact of coronavirus could finally be hitting the US labor market. If the US economy starts to weaken, recession concerns will grow quickly.