The Oil industry is suffering major losses amid the global pandemic and lockdowns put in place to contain the spread of the virus. The oil prices are at historic lows as major oil producers instead of cutting down hiked the production earlier this year. The price war between the two major oil producers in the world, Moscow and Riyadh, had pushed the oil price to the lowest in the last two decades.
Mexico disagrees with the proposed production cuts
The Organization of the Petroleum Exporting Countries (OPEC) proposed deep cuts in the production, and all members agreed to the deal except Mexico. The tentative deal would result in reductions of about 10 million barrels a day during May and June. The biggest producers in the group, Saudi Arabia and Russia, would take output down to about 8.5 million a day, with all members agreeing to cut supply by 23% in May and June. However, Mexico’s Energy Secretary Rocio Nahle Garcia to accept the proposed cuts.
Mexico’s Energy Secretary shortly after leaving the meeting said that they are ready to reduce output by 100,000 barrels a day. The group had proposed to reduce the production by 400,000 barrels a day.
Countries outside the OPEC also work to stabilize the oil market
US President Donald Trump, in a press briefing, said that he talked on the phone with Russian President Vladimir Putin and Suadi Arabia King, Trump said that both countries are looking to solve the oil production crisis. Countries outside OPEC, including the US and Canada, could contribute as much as 5 million barrels a day of additional reductions. Economies of the oil-dependent countries are suffering the most.
The crash in the price of oil because of oversupply this year has threatened the stability of oil-dependent nations. Aldo Flores Quiroga, the former Mexican deputy oil minister, said that Mexico can and should join the international community in stabilizing the oil market. He further said that cuts in oil production are both necessary and possible and its the responsible thing to do.