OPEC and its allies agreed early Friday to lower their collective crude oil production by 10 million barrels per day (bpd) until the end of second quarter of 2020.
Saudi Arabia-led OPEC and Russia-led non-OPEC oil producing nations started their 9th (Extraordinary) OPEC and non-OPEC ministerial meeting via webinar on Thursday at 1445 GMT. A statement was released by OPEC on its Twitter account around 0330 GMT on Friday.
The group dubbed as OPEC+ will lower its crude oil production by 10 million bpd, starting from May 1 until June 30 this year for a two month period, according to the statement.
For the following six months, from July 1 to Dec. 31, the output cut will be 8 million bpd. This will be adjusted to a 6 million bpd of cut for 16 months, from Jan. 1, 2021 to April 30, 2022.
The baseline for the oil production cuts will be the oil output levels of OPEC+ members in October 2018. However, heavyweights Saudi Arabia and Russia will apply the cuts based on their output of 11.0 million bpd.
While the current agreement will be valid until April 30, 2022, the extension of it will be reviewed in December 2021.
OPEC+ members will meet on June 10 this year via webinar to determine whether any other actions would be needed to balance the oil market.
- Oil prices remain weak
The output cut of 10 million bpd, which is much lower than the market expectation of 15-20 million bpd, caused oil prices to remain weak.
International benchmark Brent crude climbed as high as $33.87 per barrel during OPEC+ meeting on Thursday to end the day at $32.84 a barrel. However, it was down at $31.82 per barrel at 0500 GMT with a 3.1% decline.
American benchmark West Texas Intermediate (WTI) climbed as much as $26.45 a barrel during Thursday trading to close at $25.09 per barrel, but it was down to $23.21 a barrel at the same time with a 7.5% loss.
OPEC+ members failed to agree on March 6 in Austria capital Vienna to reach a production cut deal to support oil prices against the negative impact of coronavirus (Covid-19).
With weak global oil demand and rising glut of supply around the world, oil prices hit on March 30 their lowest level since 2002.
By Ovunc Kutlu