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In an emergency virtual meeting Sunday, OPEC+ arrived at a deal to slash oil production by 9.7 million barrels a day starting May 1, a senior OPEC source. The cuts will remain in place through June, the source said.
The group has been seeking to cut production in order to buoy oil prices, which have fallen to 18-year lows in recent weeks. The drop came as Saudi Arabia and Russia launched a brutal price war, flooding the market with oil while the coronavirus dealt a devastating blow to energy demand.
OPEC+ tried to reach a tentative deal at a meeting Thursday for a cut of 10 million barrels a day, but member country Mexico would not agree to that deal. Mexican President Andrés Manuel López Obrador said Friday his country would cut its output by 100,000 barrels per day and the United States would make up the rest of its contribution to the production cut.
The United States is not an OPEC+ member.
According to López Obrador, Trump offered during the phone call to cut US production by 250,000 barrels per day to compensate for Mexico.
At a news conference Friday, US President Donald Trump confirmed he spoke to the Mexican President and agreed to a cut, though he did not confirm the exact size. He said Mexico would reimburse the United States at a later date. “It’s a small amount for us, a large amount for Mexico,” he said.
Trump tweeted Sunday that the “big Oil Deal with OPEC Plus is done” and said that he just spoke with Russian President Vladimir Putin and King Salman of Saudi Arabia from the Oval Office.
“This will save hundreds of thousands of energy jobs in the United States,” Trump said in the tweet.
The deal to cut production by nearly 10 million barrels per day in May and June is among the deepest cuts ever agreed to by the world’s oil producers. But even that decline in output amounts to only about 10% of the world’s normal supply of oil, far below the estimates for how much demand for oil has collapsed amid the coronavirus pandemic.