Oil prices could tumble back below $20 as 'land mines lurking right below the surface' endanger a crucial OPEC deal, RBC strategist says

• The price of oil could slide below $20 for the first time since 2002 if an OPEC production cut agreement can't be reached, RBC Capital Markets strategist Helima Croft said Thursday.
• A Thursday meeting between the world's biggest producers has "several land mines lurking right below the surface" that could tank negotiations, she said in an interview with CNBC, including the US's shaky participation and Russia's hopes for a large cut from Saudi Arabia.
• Even if the meeting yields a cut to pumping activity, oil prices won't fully rebound until the coronavirus pandemic subsides and demand recovers, Croft said.
• Watch Brent crude oil trade live here.

The price of oil hinges on fragile negotiations between the world's biggest producers - and failure to ink a deal could pull the commodity below $20 per barrel, a strategist at RBC Capital Markets said Thursday.

OPEC, Russia, and other producers are slated to begin talks in a Thursday webinar, teeing up the first opportunity for a major de-escalation in the oil-price war.

Cooperation stands to pad the market against further losses, but several factors can throw talks off the rails and further escalate the global tit-for-tat, Helima Croft, head of global commodity strategy at RBC, said.

"We caution that the situation remains extremely fluid and there are several land mines lurking right below the surface that could still blow up the negotiations at the 11th hour," Croft wrote in a Thursday research note.

President Donald Trump has suggested the coalition cut production by 10 million to 15 million barrels, though the White House hasn't promised it would join other nations in slashing oil production. Russia may demand an unreasonably large cut from Saudi Arabia, the strategist added.

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Even logistical issues surrounding the meeting's format could endanger a deal. Iran's oil minister took issue with the 35-country webinar format in a Wednesday letter to OPEC's secretary general. The coalition's decisions require consensus, and while the country likely wants to avoid tanking an agreement, it still represents uncertainty heading into negotiations, Croft said.

The world's most-traded commodity has rebounded from its late-March lows, but historically weak demand amid global coronavirus lockdowns continues to pull on its price. Failed talks could place even greater pressure on oil and push prices below $20 per barrel for the first time in 18 years, Croft told CNBC in a Thursday interview.

Even in the event of an agreed-upon production cut, oil is poised to stay at decade-low prices until the coronavirus pandemic wanes, Croft added.

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"I think this agreement's important to turning off the taps and allowing potential recovery to happen," she said. "But we're not going to get a quick rebound in prices in any event, because of the real demand destruction that we're seeing because of the coronavirus."

The price conflict kicked off in early March when Russia refused to slow production at a previous OPEC+ meeting. Saudi Arabia retaliated by slashing its official oil selling price and lifting production in an attempt to steal market share from its rival. Continued escalation in the commodity fight cut oil's price by more than 50% and dragged on other risk markets around the world.

Brent crude traded 1.7% higher at $33.41 per barrel at 11:13 a.m. ET, while West Texas Intermediate traded about 2.3% higher at $25.67.

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