- OPEC has agreed to impose a deeper round of production cuts in order to support oil prices, paving the way for crunch talks with non-OPEC leader Russia, who still has to agree to the plan.
- Victor Shum of IHS Markit did not rule out the possibility of Saudi Arabia giving up on the cuts.
- "They need Russian participation, and if Russia doesn't join, they they may say well, let prices take the burden to adjust," he said.
OPEC is pushing for possible production cuts at its meeting in Vienna on Thursday and Friday. Prices have struggled following the global outbreak of the new coronavirus, which caused demand for crude to fall.
OPEC's top producer Saudi Arabia is hoping for a significant cut. The 14-member group decided on Thursday to cut production by 1.5 million barrels per day (bpd) through the second quarter of the year. But non-OPEC leader Russia is still yet to agree to the effort.
"Likely, if Saudi Arabia wants a deal, they're going to have to do a lot of the heavy-lifting themselves."
Victor Shum of IHS Markit did not rule out the possibility of Saudi Arabia giving up on the cuts.
"They need Russian participation, and if Russia doesn't join, they may say 'well, let prices take the burden to adjust'," he said.
"This is a make or break moment indeed," he told "Capital Connection."
Shum, the vice president of energy consulting at IHS Markit, said this situation is similar to what happened in 2014, when Moscow rejected Riyadh's requests to cut jointly. Prices fell sharply when Saudi Arabia decided to keep production stable.
This time, he said he expects Russia to agree to the cuts "eventually, at the last moment," though the Saudis will need to take on the burden of cutting the most.
"If they decide to cut 1 million or a bit more than that, there will be a little positive move in pricing," he said. "I don't think it's going to cause a significant change."
That sentiment was echoed by John Driscoll, director of JTD Energy Services, who said such a move would "maintain prices at a floor of $50."
"I would characterize what OPEC is doing now as a short-term, preventive action," he told CNBC's "Street Signs Asia" on Thursday.
"If they don't do anything, that will be disastrous."