OPEC + approves biggest decline in oil production

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A new deal broke out on Sunday 12 April

OPEC + participants approve the biggest drop in oil production. Photo: gx2invest.ru

OPEC + members agreed to reduce oil production by a record 10% of global supply to maintain oil prices amidst the proliferation of COVID-19.

OPEC +, which includes 14 OPEC member countries, Russia, Mexico and other oil producing states, will reduce oil production by 9.7 million barrels per day in May-June after four days of negotiations with US President Donald Trump’s participation.

Allegedly ridingThe transaction was concluded during a video conference on Sunday, with its conclusion later confirmed by the energy ministries of Kazakhstan and Azerbaijan.

It is noted that under the agreement on the biggest reduction in oil production, countries have plans to reduce production in two years – by April 2022. Kuwait’s oil minister said the G20 countries would also be part of the deal, which together with OPEC + would extract about 20 million barrels per day from the market. OPEC + wants external producers like the United States, Canada, Brazil and Norway to reduce production by 5% or 5 million barrels per day.

It has been reported that the signing of the OPEC + agreement was delayed from 9 April, as Mexico refused to reduce production by 400 thousand barrels per day. However, President Andres Manuel López Obredor later said on Friday that Trump had proposed to the United States to increase the cuts instead of Mexico, which could be offset later. How exactly this would work, the US President did not specify.

According to Reuters, the demand for fuel and oil prices was negatively affected with the aim of dealing with coronaviruses. All of this affects the budget of oil companies, halting US offshore oil production, which is susceptible to lower prices due to higher costs.

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Recall, the Russian Federation’s Energy Minister Alexander Novak said on 6 March that Russia would no longer meet the terms of the OPEC + agreement to reduce oil production. The Russian Federation’s decision, voiced by a politician during a meeting with Saudi Arabia’s Prince Abdulaziz bin Salman at the OPEC headquarters in Vienna, led to a record fall in oil prices and a fall in stock markets on 9 March.

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