OPEC, Russia and other oil-producing nations on Sunday, April 12; finalized an unprecedented production cut of nearly 10 million barrels, or a tenth of global supply, in hopes of boosting crashing prices amid the coronavirus pandemic and a price war, officials said.
Oil prices have collapsed as the coronavirus and the COVID-19 illness it causes have largely halted global travel and slowed down other energy-chugging sectors such as manufacturing.
It has devastated the oil industry in the United States, which now pumps more crude than any other country.
But some producers have been reluctant to ease supply.
The OPEC and other nations on Sunday agreed to allow Mexico to cut only 100,000 barrels a month; a sticking point for an accord initially reached Friday after a marathon video conference between 23 nations.
The nations together agreed to cut 9.7 million barrels a day throughout May and June.
The group reached the deal just hours before Asian markets reopened Monday and as international benchmark Brent crude traded at just over $31 a barrel and American shale producers struggle.
But it had not been smiles and laughs for weeks; after the so-called OPEC+ group of OPEC members and other nations failed in March to reach an agreement on production cuts, sending prices tumbling.
Saudi Arabia sharply criticized Russia days earlier over what it described as comments critical of the kingdom; which finds itself trying to appease Trump, a longtime OPEC critic.
“They’ve spent over the last month waging war on American oil producers while we are defending theirs. This is not how friends treat friends,” said Sen. Kevin Cramer, a Republican from North Dakota, before the OPEC+ deal.
Iranian Oil Minister Bijan Zanganeh also told state television that Kuwait; Saudi Arabia; as well as the United Arab Emirates would cut another 2 million barrels of oil a day between them atop the OPEC+ deal.
The three countries did not immediately acknowledge the cut themselves; though Zanganeh attended the video conference.
Officials said other planned cuts would stand in the deal; meaning an 8 million barrel per day cut from July through the end of the year and a 6 million barrel cut for 16 months beginning in 2021.
“This will enable the rebalancing of the oil markets and the expected rebound of prices by $15 per barrel in the short term,” said a statement from Nigeria’s oil ministry.