OPEC and Russia meet again to approve the largest ever oil cut

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BAKU / DUBAI / LONDON (Reuters) – OPEC, Russia and other oil-producing countries met on Sunday to reach an agreement on the largest oil cut ever, accounting for 10% of global supply, after their first efforts to support oil. prices in the midst of the coronavirus pandemic have been frozen by Mexico.

File photo: The logo of the Organization of the Exporting Petroleoum Countries (OPEC) is visible outside OPEC headquarters in Vienna, Austria, April 9, 2020. REUTERS / Leonhard Foeger

The group, known as OPEC +, began a video conference at 5:15 p.m. GMT.

OPEC + described its plans to cut production by more than a fifth, or 10 million barrels per day (b / d), on Thursday, but Mexico backed down from the production cuts it told it to. had been asked to delay the signing of a final agreement.

“The ministerial meeting between OPEC and non-OPEC members follows the April 9 meeting,” said Azerbaijan’s energy minister, OPEC +, on Sunday.

Measures to curb the spread of the coronavirus have destroyed fuel demand and depressed oil prices, straining oil producers’ budgets and hammering the US shale industry, which is more vulnerable to low prices due to its higher costs.

OPEC + also said it wanted producers outside the group, such as the United States, Canada, Brazil and Norway, to further reduce 5% or 5 million bpd.

Canada and Norway have indicated their willingness to cut back, and the United States, where legislation makes it difficult to work in tandem with cartels such as OPEC, said production will drop by itself this year in because of the low prices.

Mexican President Andres Manuel Lopez Obrador said Friday that US President Donald Trump had offered to make additional cuts to the United States on his behalf, an unusual offer from a Trump who has long criticized OPEC.

((For an analysis of the reasons for the deadlock in Mexico with OPEC + click)))

Trump, who had threatened Saudi Arabia with oil tariffs if he did not resolve the market oversupply problem, said Washington would help Mexico by picking up “some of the slack” and being reimbursed later.

He did not say how it would work and the leader of OPEC, Saudi Arabia, has so far refused to accept the solution, OPEC sources said.

Global demand for oil is estimated to have decreased by a third, as more than 3 billion people have been locked up in their homes due to the coronavirus epidemic.

A 15% drop in supply may not be enough to stop the prices going down, Goldman Sachs and UBS banks predicted last week that Brent prices would drop to $ 20 a barrel from $ 32 a barrel today. and $ 70 at the start of the year.

Report by the OPEC Reuters team, Nailia Bagirova in BAKU, Katya Golubkova in MOSCOW and Tamara Vaal in NUR-SULTAN; Writing by Andrey Ostroukh and Dmitry Zhdannikov; Editing by Jason Neely, Alison Williams and Alex Richardson

Our standards:Principles of the Thomson Reuters Trust.

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