TEHRAN, Iran, March 28
China's progress in controlling the coronavirus spread can help improve the oil market, the head of Iranian Oil Gas and Petrochemical Products Exporters Union Hamid Hosseini told Trend.
"At the same time, Iran can act as an intermediate in OPEC-Russia negotiations and help agree on an output cut," he said.
He reminded that oil is the biggest trading commodity in the world, as 45 million barrels of oil are being sold daily, valued at $5 billion overall.
At the end of 2018, OPEC and a number of non-affiliated countries decided to extend the agreement on reducing oil production, which has been in force since the beginning of 2017. The countries agreed to reduce their production by a total of 1.2 million barrels per day from the level of October 2018.
A decision was passed in Vienna on July 2, 2019, regarding the extension of the agreement on the reduction of oil production by the countries of OPEC and non-members of the cartel until the end of the first quarter of 2020.
During the meeting held March 6, OPEC+ failed to reach any agreement on extension of the deal or deepening the cuts further, which led to a significant decline in oil prices.
On the morning of March 9, 2020, Brent crude plunged 25 percent dropping to its lowest since February 2016 and recording biggest one-day percentage declines since Jan. 17, 1991.
"The fall of oil price certainly is in favor to some countries - European countries, China, India, but many countries of the Middle East would lose," Hosseini said.
"Thanks to the coronavirus spread, everyone is uncertain regarding the future, so the only positive outlook for the oil market was China stopping the spread of the disease," he said.
Russia's stubbornness and disagreement with OPEC resulted in Saudi Arabia reaching no results regarding the production cuts, he said.
"One of the targets of Saudi Arabia was the rise of oil price and selling the ARAMCO's shares with good price. Therefore Saudi Arabia would face losses because of the drop of oil price and won't be able to implement its projects," he added.
"There is still possibility that countries would reach a conclusion and the oil price would not fall under $40," he added.
The World Health Organization (WHO) on March 11 declared COVID-19 a pandemic.