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The Organization of the Petroleum Exporting Countries (OPEC) and other producers today reached an agreement to increase prices by reducing production by 9.7 million barrels per day, sources linked to the negotiations announced.
The cut announced today represents a tenth of the world’s supply, according to sector officials from various countries who participated in the negotiations, which is an unprecedented agreement. Due to the consequences of the spread of the covid-19 virus, with the impact on the economy and the decrease in consumption, the OPEC Joint Technical Committee has recommended cuts in oil production.
Mexico’s energy minister said today, in a message on Twitter, that the group agreed to cut 9.7 million barrels per day, starting May 1, information confirmed by Kuwaiti oil minister Khaled. al-Fadhel on the same social network, after the group meeting by videoconference.
The Iranian oil minister also wrote on Twitter that the cut will be made in May and June, and that the countries have agreed that Mexico will reduce production by 100,000 barrels during those months.
Initially, Mexico had blocked the deal, but President Andrés Manuel López Obrador said Friday that he had agreed with the President of the United States, Donald Trump, that he would compensate for what Mexico cannot cut now. “The United States will help Mexico on this journey and reimburse us later, when they are ready for it,” Trump said at a press conference at the White House on Friday.
“We agree to decrease production. And them [México] He agrees to do something to compensate us in the future, “said Donald Trump, referring to the reduction of oil production in the United States of America (USA) by 250,000 barrels per day. The President of the United States said that he had He discussed this issue with his Mexican counterpart, who, he recalled, “helped” the United States at the border, adding that he had held talks on this issue with Russia and Saudi Arabia.
After lengthy negotiations, on Friday morning, OPEC and partner countries, with the exception of Mexico, agreed to reduce world production to 10 million barrels per day in May and June. Mexico City considered that the effort required (a reduction in production of 400,000 barrels per day) is excessive compared to other countries. The United States of America agreed to help Mexico achieve its reduction quota to reach a global agreement and contain the fall in prices.
The agreement between oil-producing countries to reduce world production by 10 million barrels per day also provides for a reduction from July to December to eight million barrels per day. The objective is to find a solution to the rapid drop in oil prices due to the collapse of demand and the price war between Saudi Arabia and Russia.
The covid-19 pandemic has unbalanced a market in which global supply was already in surplus and is now in rarely seen proportions, with travel restrictions adopted in all countries to prevent the spread of the disease.
A new meeting is scheduled for June 10, also by video conference, “to decide additional measures, as much as necessary to balance the market.” The agreement also provides for a level of reduction in production between January 2021 and April 2022.
The new coronavirus, responsible for the covid-19 pandemic, has already killed more than 100,000 people and infected more than 1.6 million in 193 countries and territories. Of the cases of infection, more than 330 thousand are considered cured. After appearing in China in December, the outbreak spread across the world, prompting the World Health Organization (WHO) to declare a pandemic situation.
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