A historic deal to cut global crude oil output has been reached between OPEC, Russia and a group of 20 countries including the US, Canada, Brazil, and Mexico.
OPEC has agreed to cut 8.7 million barrels of Crude while the US, Brazil, Canada will cut an additional 3.7 million barrels per day of Crude totalling 13.4mbpd.
After over a week of bilateral talks and four days of virtual meetings with government ministers from around the world, including the OPEC+ alliance and Group of 20 nations, the nations finally agreed to tackle the impact of the global pandemic on demand.
Though the talks almost fell apart due to the resistance from Mexico, as Nairametrics had reported earlier on Sunday, the wait is finally over.
According to Bloomberg, OPEC officials were still waiting to hear more from Group of 20 members though it’s not clear if those numbers will represent real cuts or just production idled because of market forces.
Are the cuts enough? This is the question raised by industry observers, as they are not sure whether the cuts will be enough to throw a floor under prices as demand for energy deepens.
Presently, the oil market is battling for its survival, as it is faced with several challenges. some of them are extended lockdown across the globe, the death toll mounting in New York, and unemployment exploding in America and some parts of Africa.
Nairametrics had reported earlier that there appears to be no respite for the oil crisis, despite the announcement of a deal by Organization of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) for output cut, in order to help stabilise the market.
A report from Bloomberg indicates that the global deal for an oil output cut, which was initiated to stop the historic crude oil price crash, appears to be in danger, and negotiators are racing against time to reach an agreement, with only a few hours left before the market opens.
This happened as the diplomatic row between Saudi Arabia and Mexico entered its fourth day, with a group of OPEC+ ministers expected to speak at 5 p.m. London time. Some of the delegates, however, pointed out that some progress had been made, with Russian officials warning that there would be unmanageable chaos if the negotiations failed.
Though some OPEC+ member countries had suggested removing Mexico from the group, the Energy Minister of Saudi Arabia, Prince Abdulaziz Bin Salman, said that the whole agreement is hinged on Mexico agreeing to the deal.
The official spokesperson for the Russian President, Dmitry Peskov, said, “The whole world needs this deal.”