OPEC+ confirms oil output cut by 9.7 mln bpd from May 1 after compromise with Mexico
OPEC+, the group composed of OPEC, Russia and other oil producing nations, has successfully concluded a deal to cut oil output by nearly 10 million barrels per day (bpd), which amounts to 10 percent of global supply, after a compromise with Mexico, during the virtual extraordinary meeting on Sunday.
“By the grace of God, then with wise guidance, continuous efforts and talks since the dawn of Friday, we now announce the completion of the historic agreement to reduce production by approximately 10 million barrels of oil per day from members of OPEC + starting from May 1, 2020,” Kuwait’s oil minister Khaled al-Fadhel tweeted.
Mexico’s oil minister Rocio Nahle also said on Twitter: “Mexico appreciates all the support of the countries of OPEC at the extraordinary meeting held today. The unanimous agreement of the 23 participating countries will initiate a reduction in oil output by 9.7 million barrels per day from May.”
Mexico had been holding out on cutting its output by 400,000 bdp as per the proposed OPEC+ deal required and countered with an output cut of 100,000 bdp.
Iran’s oil ministry said on Twitter: “The oil and energy ministers of #OPEC+ countries, in their tenth extraordinary meeting via webinar, finally endorsed Mexico's offer to cut its output by 100,000 b/d in May and June, 2020.”
Measures to curb the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining budgets of oil producers and hammering the US shale industry, which is more vulnerable to low prices due to its higher costs.
Mexico President Andres Manuel Lopez Obrador said on Friday that US President Donald Trump had offered to make extra US cuts on his behalf, an unusual offer by a Trump who has long railed against OPEC.
Trump, who had threatened Saudi Arabia with oil tariffs if it did not fix the market’s oversupply problem, said Washington would help Mexico by picking up “some of the slack” and being reimbursed later. He did not say how this would work.
Global oil demand is estimated to have fallen by a third as more than 3 billion people are locked down in their homes due to the coronavirus outbreak.