The Organization of the Petroleum Exporting Countries (OPEC) and its main Russian ally failed on Friday to reach an agreement to cut production and stop the drop in oil prices affected by the new coronavirus epidemic.
“As of April 1, taking into account the decision made today, no country, neither OPEC, nor OPEC +, is obliged to reduce production,” said Russian Energy Minister Alexandre Novak.
OPEC was proposing to Russia and its other nine partners an additional collective cut of 1.5 million barrels a day so as not to let the epidemic ruin the painful efforts made since 2017 to maintain oil prices in a market where there is oversupply.
Eager to send a strong signal to the markets, OPEC even decided to extend the period of this limitation until the end of 2020, instead of the three additional months initially contemplated.
Following that, OPEC responded by removing all limits on its own production and oil prices suffered their biggest daily slump in more than 11 years on Friday.
The split between OPEC and Russia recalled a drop in the price of oil in 2014, when Saudi Arabia and Moscow clashed over market share with producers of oil shale from the United States, which have never participated in pacts that limit the production.
Following the failure of negotiations, Saudi Arabia, one of OPEC’s main allies, decided on Sunday the biggest cut in its barrel prices in 20 years, sparking a price war with large oil cuts.