On Sunday, OPEC, Russia, and other oil-producing nations agreed to a record cut in oil production. The decision was announced just hours before the Asian markets were opened. OPEC plus other countries, including the USA, agreed to cut oil production nearly 10 million barrels per day to stabilize the oil prices amid coronavirus pandemic and a price war between Russia and Saudi Arabia.
Mexico agrees to cut oil production by 100,000 barrels per day.
Earlier the international deal to cut oil production came under threat after Mexico refused to cut oil production as proposed by other members. Mexico was supposed to cut its oil production by 400,000 barrels per day, which Mexico refused. OPEC plus other countries allowed Mexico to cut oil production by 100,000 barrels per day, which Mexico agreed to. Mexican President Andres Manuel Lopez Obrador said on Friday that US President Donald Trump offered to make extra cuts on his behalf.
President Trump tweeted, saying that he would like to thank and congratulate President Putin of Russia and King Salman (1) of Saudi Arabia for reaching consensus. He added that this deal would save hundreds of thousands of energy jobs in the United States.
Oil price rallies after countries reach an agreement to cut production.
Oil prices rallied on Monday after OPEC plus nations announced the deal to cut oil production by nearly 10 million barrels per day. The international benchmark, Brent crude, was up by 5%, at $33.08 a barrel. The group, known as OPEC plus, will gradually keep decreasing curbs on oil production until April 2022. Saudi energy minister Abdulaziz bin Salman noted that effective oil supply cuts from OPEC and its allies would amount to 12.5 million barrels per day, due to higher output in April from Saudi.
Oil prices have been in freefall since earlier this year due to lockdowns to contain the spread of coronavirus and a price war between Russia and Saudi Arabia. According to Amrita Sen, the chief oil analyst at consultancy Energy Aspects Lt, these cuts need to be in place for several months to come anywhere close to solving the oil crisis.
