The Organization of the Petroleum Exporting Countries (OPEC) revealed the details of the overall crude oil production cuts in a statement published on April 9.

The world’s leading oil nations tentatively agreed to cut production in a meeting held via webinar on April 9, in an effort aimed at stabilizing the volatile oil market.

In the meeting, the OPEC and non-OPEC oil producing countries agreed to cut their overall crude oil production by 10 million b/d, starting on May 1, 2020. This initial period of downward adjustment is expected to conclude on June 30, 2020.

For the following six months, the output cut will be 8 million b/d. It will be followed by a 6 million b/d adjustment for a period of 16 months, from January 1, 2021, to April 30, 2022.

However, the statement said that those measures were conditional on the consent of Mexico, which refused to agree on a 10 million b/d cut.

On April 9, the US benchmark West Texas Intermediate (WTI) crude oil futures fell $2.33 to settle at $22.76/barrel and Brent crude fell $1.36 to settle at $31.48/barrel. Earlier in the intraday session, the WTI futures rose more than 12% to trade at $28.36/barrel while Brent crude futures hit as high as $36.40/barrel amid reports that the deal could reduce output by 20 million b/d.

OPEC and Russia reportedly agree on outline of production cut

Initial reports revealed that the Organization of the Petroleum Exporting Countries (OPEC) and other oil producers have reportedly reached an agreement to cut oil production during today’s meeting. According to Reuters’ reports based on non-official statements, the output cut may reach up to 20 million barrels/day, which is equivalent to about 20% of global supplies.

In the meantime, whether the US will be a part of a possible deal or not remains unknown at the time of the writing. The deal will be enacted only if the US joins in, noted media sources.

The decision came in an attempt to resume the balance in oil prices and support the energy markets at multi-year low after crude oil futures slumped earlier in March.

Source : Chemorbis