Published: 10:39, April 10, 2020 | Updated: 04:55, June 6, 2023
Saudi, Russia outline record oil cut under US pressure
By Agencies

The sun sets behind an idle pump jack near Karnes City, Texas, April 8, 2020. (ERIC GAY/AP)

DUBAI/MOSCOW/LONDON - OPEC, Russia and other allies outlined plans on Thursday to cut their oil output by more than a fifth and said they expected the United States and other producers to join in their effort to prop up prices hammered by the coronavirus crisis.

But the group, known as OPEC+, said a final agreement was dependent on Mexico signing up to the pact after it balked at the production cuts it was asked to make. Discussions among top global energy ministers will resume on Friday.

OPEC and Russian sources said they expected other producers to add 5 million bpd to cuts, although an OPEC+ statement on Thursday made no mention of any such condition

The planned output curbs by OPEC+ amount to 10 million barrels per day (bpd) or 10 percent of global supplies, with another 5 million bpd expected to come from other nations to help deal with the deepest oil crisis in decades.

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Global fuel demand has plunged by around 30 million bpd, or 30 percent of global supplies, as steps to fight the virus have grounded planes, cut vehicle usage and curbed economic activity.

Thursday’s OPEC+ talks will be followed by a call on Friday between energy ministers from the Group of 20 (G20) major economies, hosted by Saudi Arabia.

OPEC and Russian sources said they expected other producers to add 5 million bpd to cuts, although an OPEC+ statement on Thursday made no mention of any such condition.

Brent oil prices, which hit an 18-year low last month, were trading around US$32 a barrel on Thursday, half their level at the end of 2019.

Before the talks, Moscow and Riyadh had been at odds over what level of production to use to calculate reductions, after Saudi Arabia hiked its supply in April to a record 12.3 million bpd, up from below 10 million bpd in March. Russian output, meanwhile, has been running about 11.3 million bpd.

The two nations fell out during an acrimonious meeting in Vienna in March, when a previous production deal collapsed.

The two sides agreed on Thursday that cuts would be made from an 11 million bpd baseline for both countries, OPEC+ documents showed.

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“We have managed to overcome differences. It will be a very important deal. It will allow the oil market to start on a path to recovery,” said Dmitriev, who last month was the first official to propose a deal involving members other than OPEC+.

Several US states could order private companies to limit production under rarely used powers. The oil regulator in Texas, the largest producer among US states with output of about 5 million bpd, meets on April 14 to discuss possible curbs.