The Organization of the Petroleum Exporting Countries (OPEC) and other oil-producing countries are working on a deal for an unmatched production cut equivalent to about 10% of global supply.
This was disclosed after the US President Donald Trump asked oil nations to stop the oil rout caused by the Coronavirus pandemic.
Meanwhile, the meeting of OPEC and Russia has been scheduled for Monday, April 6, 2020, but details are still not clear on the distribution of production cuts among the oil-producing countries.
Oil prices had dropped to about $20 per barrel from $64.5 at the beginning of 2020, as more than 3 billion people went into lockdown because of the COVID-19 pandemic, plunging world oil demand by as much as 30 million barrels per day.
President Donald Trump had explained that he spoke with both Russian leader, Vladimir Putin and Saudi Crown Prince Salman, and they both agreed to reduce supplies by 10 million bpd out of total world supply of around 100 million barrels per day.
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A source in OPEC explained that any cut in excess of 10 million barrels per day must include oil producers from outside OPEC+, an alliance which has OPEC members, Russia and other oil producers, but excludes oil countries such as Brazil, Canada, Norway and the United States.
In addition, crude oil production cuts are to happen with or without OPEC, as global oil storage tanks are almost getting full.
What it means: Many crude oil producers would soon have no choice but to start shutting down oil production.
About 3 billion people around the globe have been put on lockdown to slow the spread of the COVID-19 pandemic, which has affected the health of about a million people globally and killed over 54,000.
The intense decline in oil demand drove crude oil prices to its lowest levels since 2002, negatively affecting budgets of oil-producing countries and causing a massive blow to the American shale oil industry, which cannot remain competitive at low prices.