OPEC and its allies have reached a final agreement late Sunday to cut their collective oil production by a record level of 10 million barrels per day (bpd) starting from next month to balance the oil market.
Saudi Arabia-led OPEC that includes 13 countries and Russia-led non-OPEC that has 10 nations came to a final deal after four days of intense negotiations to lower their oil output in order to mitigate the adverse impact of coronavirus on low global oil demand and falling crude prices.
The group known as OPEC+ will lower its crude oil production by 10 million bpd beginning on May 1 for an initial period of two months, then by 8 million bpd from July to December 2020; and later by 6 million bpd from January 2021 to April 2022.
The deal is a "commitment of the producers in the OPEC+ group to stabilize energy markets and acknowledged the importance of international cooperation in ensuring the resilience of energy systems," OPEC Secretary-General Mohammad Barkindo said in a statement.
As part of the agreement, OPEC heavyweight Saudi Arabia will lower its oil production by 3.5 million bpd, from 12 million bpd to 8,5 million bpd. Non-OPEC leader Russia will cuts its output by 1.8 million bpd, from 10.3 million bpd to 8.5 million bpd, according to local sources.
- US to carry Mexico cut
Mexico, who has been a topic of controversy for the last days, will cut its crude oil production by 100,000 bpd, instead of the required 400,00 bpd.
The remaining 300,000 bpd will instead come from the U.S., the world's largest crude oil producer, according to sources.
"The big Oil Deal with OPEC Plus is done. This will save hundreds of thousands of energy jobs in the U.S.," President Donald Trump said in his Twitter account after the deal.
"I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia. I just spoke to them from the Oval Office. Great deal for all!" he added.
Due to coronavirus-related low oil demand around the world and OPEC+ nations failing to agree on a production cut on March 6, crude oil prices plummeted on March 30 to their lowest level since 2002.
By Ovunc Kutlu