OPEC leaders, along with Russia, will hold an emergency teleconference Thursday to discuss what could be the largest output cut in the cartel's history amid a record collapse in global crude prices triggered in part by the coronavirus pandemic.

President Donald Trump first floated the idea of output cuts last week when he Tweeted the Saudi Arabia and Russia had agreed to reductions that could reach 10 million barrels per day. That would not only be the largest daily reduction in OPEC's history -- more than five times the record 2.2 million barrel per day pact agreed in 2008 -- it would also be around half of the output of the world's second and third largest producers.


Reuters, in fact, has reported that the Thursday talks could see a cut of up to 20 million barrels per day, but that will likely be split among non-member states following tomorrow's G20 conference call.

Russia, which failed to agree to a much smaller cut during OPEC's chaotic meeting in Vienna in early March, is said to be willing to cut by 1.7 million barrels per day if cartel members can make up the difference and U.S. drillers are willing to participate.

"While this is around 15% of their total output and would be a meaningful cut, it would still be a struggle for the whole of OPEC+ to reach 10 million barrels per day, and therefore require the help of other oil producers if they are to get near this target," said ING's head of commodity strategy Warren Patterson.

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"Furthermore, if the group does manage to agree on a 10 million barrels per day cut, while it would offer some short-term relief to the market, it would still not be enough to balance it over 2Q20," he added. "So it may not take too long for prices to come under pressure once again."

Brent crude futures contracts for June delivery, the benchmark reference for around 60% of global crude purchases, were last seen $2.47 higher from their Wednesday closing price in New York and changing hands at $35.31 per barrel.

WTI crude futures for May delivery, which are more tightly connected to domestic gas prices, were marked $2 higher at $27.09 per barrel, after briefly trading south of $20 in the early part of last week.

Trump has added further pressure on the cartel's discussions, which are expected to be followed by a G20 teleconference on Friday, but threatening to slap "very substantial" tariffs on non-U.S. crude imports in order to protect jobs in the American energy industry.

"If I have to do tariffs on oil coming from outside or if I have to do something to protect our tens of thousands of energy workers and our great companies that produce all these jobs, I'll do whatever I have to do," Trump told reporters late Sunday after weekend meetings with energy executives at the White House.

Source: www.thestreet.com

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