Beijing, April 4 (Xinhua)-- OPEC+ is urging the formation of an unprecedented global alliance to cut production and stop the historic collapse in oil prices.

Oil prices rose as an idea first put forward by US President Donald Trump on Thursday seemed to be gaining some support. People familiar with the matter said the Russian oil industry was preparing to cut production and OPEC+ hastily scheduled a meeting on Monday.

With the coronavirus epidemic hitting as much as 1/3 of global demand, the collapse in oil prices threatens the budgetary and political stability of oil-dependent countries, the survival of the US shale industry and millions of jobs in the already volatile oil industry.

There are still obstacles to reaching an agreement. There is no sign that Trump will succumb to Saudi and Russian demands that the United States and other countries join in production cuts. This will require flexible and complex diplomacy at a time when governments are focused on fighting the virus.

Realistic goal

But a representative who spoke on condition of anonymity said that reducing global production by 10 million barrels a day was a realistic goal. The figure was first put forward by Trump on Thursday when he called for coordinated production cuts.

It would be unprecedented for non-OPEC+ countries, including the United States, to reach an agreement to cut production. OPEC has been managing supplies since the 1960s, but OPEC's power has waned as the shale revolution transformed the US from an importer to a major oil producer. Fatih Birol, head of the International Energy Agency, said Saudi Arabia should organize a G-20 meeting to solve the problem of oversupply.

Although there is no sign of a ceasefire and Saudi Arabia is sticking to its commitment to increase exports, the diplomatic situation is changing rapidly.

Saudi Arabia has been passive with Russia for days because Moscow sounded willing to talk and blamed Saudi Arabia for the fall in prices. By changing its position and saying publicly that it was prepared to cut production, Saudi Arabia put the blame back on Moscow. The Kremlin has yet to state its official position.

This is a battle of will and finesse between Putin and Saudi Crown Prince Mohamed Ben Salman. It is Mr Trump who is sitting on the sidelines, trying to force them to reach a deal and avoiding making too many promises.

Later on Friday, Trump met with oil executives, who were also divided about what the government should do. Russian President Vladimir Putin will also meet with Russian oil industry executives.

Big enough?

Even if an agreement can be reached, cutting production by 10 million b / d will not offset the oil glut caused by the economic impact of the epidemic. Traders estimate that demand losses could be as high as 35 million barrels a day.

Birol said in an interview on Friday that cutting production by 10 million barrels "could be a good start." However, "in the second quarter, we are likely to see an increase in inventories of more than 15 million barrels per day." I think that's why we need to do more. "

Brent crude, which soared after Trump's speech on Thursday, rose as much as 17% on Friday. But it is still down nearly 50% this year, as the coronavirus grounded aircraft and shut down the global economy.

In some corners of the market, spot oil has become "inverted money", and some producers are expected to stop production because there is not enough room to store excess crude oil. Oil tanks fill up quickly, and tankers are used for storage rather than transportation.