Bahrain said on Monday that it is to supporting cuts on oil production by an additional 600,000 bpd. As recommended by the OPEC+ Joint Technical Committee (JTC) during last week’s meeting.
“The proposed voluntary adjustment in production is recommended to counter the expected drop in oil demand, mainly in China, due to coronavirus outbreak.” Sheikh Mohammed bin Khalifa Al Khalifa, Bahrain’s oil minister, said in a statement.
Oil fell by more than 20% compared to January. After worries over the hit to global demand from the coronavirus sparked a selloff.
Brent crude dropped to USD53.63 per barrel at the beginning of Asian trading. It reached the lowest level since the 2nd of Jan. 2019. However, it reduced its losses to reach USD54.32 by 08:04 GMT, with a drop of 15 cents.
This coincides with Permanent Representative of Russia to International Organizations in Vienna Mikhail Ulyanov telling Sputnik that: “As of today, the 18th meeting of the Joint Ministerial Monitoring Committee of OPEC+ countries is scheduled for March 4, and the 8th Ministerial Meeting of OPEC+ is scheduled for March 6.
These dates can theoretically differs, including due to the situation with coronavirus and its impact on the world oil market.”
Technical experts recommended a further supply cut of 600,000 bpd through June, said OPEC delegates according to Bloomberg.
PetroChina, China’s second-biggest state refiner, plans to reduce its crude throughput by 320,000 bpd this month. This is versus its original plan as the Wuhan virus hits fuel demand, a company official told Reuters on Monday.
PetroChina’s planned February cut is equivalent to about 10 percent of the refiner’s average production rate of around 3.32 million bpd.
This would bring total production scalebacks by state refiners, include Sinopec Corp and China National Offshore Oil Company, to around 940,000 bpd for this month.
The cuts from PetroChina are likely to decline to 377,000 bpd in March, said the senior company official.
Reuters reported last week that Sinopec Corp, Asia’s largest refiner, is cutting its throughput this month by 600,000 bpd, or 12 percent of its average crude runs, its deepest reduction in over a decade. Independent Chinese refiners in Shandong, meanwhile, have slashed output to below half their capacity.
“The production cuts are mostly on refineries in northeast and north China. Where demand hits harder than in the western parts of the country,” said the PetroChina official.