Following the Organisations of Petroleum Export Countries virtual meeting today, Saudi Arabia and Russia have struck a deal on a deep output cut.
Reuters stated that the cut amount to 10 million barrels per day (bpd) or 10% of global supplies, with another 5 million bpd. The 5 million bpd is expected to come from other nations to help deal with the deepest oil crisis in decades.
The deal would reportedly last for two years with the cuts implemented gradually, Reuters said.
READ MORE: Oil production drops, as Nigeria complies with OPEC’s cut
Nairametrics had reported earlier on Thursday that there would be a virtual meeting, which started around 10:45 am ET, between OPEC and its allies, known as OPEC+.
Some of the world’s largest producers were set to discuss historic production cuts as the Coronavirus pandemic saps demand for crude oil.
Oil prices reversed course and turned negative as traders awaited confirmation of the cuts as well clarity on key details, including how the cuts would be divided among OPEC+, as well as the production numbers on which the cut would be based.
U.S. West Texas Intermediate fell 9.29%, or $2.33, to settle at $22.76 per barrel. Earlier, the contract jumped more than 12% to hit a session high of $28.36. International benchmark Brent crude slipped 4.14% to settle at $31.48, after earlier hitting a high of $36.40.
“Covid-19 is an unseen beast that seems to be impacting everything in its path,” OPEC Secretary General Mohammad Barkindo said at the meeting. “For the oil market, it has completely up-ended market supply and demand fundamentals since we last met on 6 March,” he added.
U.S. President Donald Trump said, last week, that he had brokered a deal with Saudi Arabia and Russia could lead to cuts of 10 million to 15 million bpd. Even that range, which was lower than the one cited by sources on Thursday, would be unprecedented.
