Saudis fear costly oil price collapse if output cuts delayed

The kingdom has been working to convince fellow OPEC members and their allies that cuts are needed now, say sources.
Saudi Arabia wants global oil producers to agree to a quick oil supply cut as China’s coronavirus knocks demand, aware that delays in the past led to costly price collapses, sources familiar with the kingdom’s thinking have told Reuters. Saudi Arabia sees a potentially bigger impact on oil demand this time than during the 2002-03 severe acute respiratory syndrome (SARS) epidemic due to China’s now-far-larger role in the global economy, the sources said. Oil prices have fallen by more than $11 a barrel this year to $54, alarming producers as the coronavirus – which has killed more than 1,000 people in China – spread.
One OPEC source said Riyadh wanted a quick supply cut to “put a floor under the prices”.
“The Saudis want to be proactive and to keep oil prices at $60 a barrel or above,” the source said. Saudi Arabia is OPEC’s biggest producer and has in the past often orchestrated OPEC production cuts or increases to keep oil prices at a preferred level.
But OPEC has not always acted early enough.
OPEC was criticized for not preventing oil prices from spiking during a 2008 rally that saw Brent crude top $147 per barrel on supply fears. The group was equally slow to react to the global financial crisis that unfolded and saw demand collapse and oil prices fall towards $30 per barrel.
Source: aljazeera.com