OPEC and Other Oil Exporters Agree to Reduce Production

Agreement reached welcomed by Donald Trump OPEC and its partners, including Russia and Mexico, on Sunday agreed to cut global oil production by 9.7 million barrels per day starting May 1 to raise global prices which the coronavirus pandemic took a heavy toll on. Ministers of 23 oil-producing countries held a virtual emergency meeting and reached an agreement just a few hours before the start of oil trading in the new week. The price of Brent crude for the last month fluctuated around $ 30 per barrel, at some point falling to $ 20, which negatively affected the budgets of oil-producing countries. Saudi Arabia-led OPEC and other major producers, primarily Russia, agreed on Thursday to cut production by about 10 percent of global supply. However, Mexico opposed the proposed reductions, which led to a delay in finalizing the agreement. In accordance with this proposal, Mexico will reduce production by 100 thousand barrels per day instead of the previously proposed 400 thousand. Saudi Arabia is the world's largest exporter and has the largest oil reserves, although the United States is the leader in terms of production. US President Donald Trump, who called on oil producers to cut production, welcomed the deal. “It will save hundreds of thousands of jobs in the US energy sector. I would like to thank and congratulate Russian President Putin and King Salman of Saudi Arabia. I just talked to them from the Oval Office. Great deal for everyone! ” Trump tweeted. The White House later disseminated message about phone conversations on Sunday with the President of Russia and the Crown Prince of Saudi Arabia. During these conversations, Trump thanked Vladimir Putin and Mohammed bin Salman for “working to calm the global energy markets,” and welcomed their commitment to “return oil production to a level consistent with the stability of the global energy and financial markets.” Amid falling global oil prices over the past month, Trump has said that American motorists will benefit from lower gas prices, despite the fact that many drivers cannot go anywhere due to quarantine. But when oil prices continued to fall, Trump took a more moderate tone, saying that global prices should be stabilized, because otherwise the American shale oil industry could collapse, leading to the disappearance of thousands of jobs. Iranian Oil Minister Bijan Namdar Zanganeh said that the results of the reduction in production will follow almost immediately. “We expect that the market will gradually return to a moderate situation, and the results will be visible tomorrow morning, when world markets open. When oil barrels are physically removed from the market ... the interpretation of this decision by the market will be very decisive,” he said, noting that the need to reduce production will not affect Iran, Libya and Venezuela, which are under US sanctions. Canada supported the decision. “It's good. We welcome any news that brings stability to the global oil markets,” said Minister of Natural Resources Seamus O’Regan. The agreement was welcomed by Mike Sommers, Executive Director of the American Petroleum Institute. “This is an important agreement that promotes greater stability in the energy markets and benefits both US energy consumers and its producers,” Sommers said in a statement.