The Organization of Petroleum Exporting Countries (OPEC) and its allies (the so-called OPEC + group, which includes Russia and Mexico) managed to seal a deal on Sunday, April 12.
Since Thursday, this agreement was being negotiated. On that day, a cut of 10 million barrels per day was agreed to take effect in May and June, but Mexico did not agree with the production quota allocated to it and the understanding was "by a thread" (as it happened in March, but this time on account of the Russian finca-foot).
OPEC +, which has 13 OPEC members and 10 partner countries, will reduce its production by 9.7 million barrels per day - less than the 10 million initially agreed.
Mexico appears to have achieved a diplomatic victory, as it will only have to cut its production by 100,000 barrels per day - less than its extended quota.
The USA, Brazil and Canada (all members of the G20) will contribute to an additional cut of 3.7 million barrels per day, the same sources commented to the news agency.
If confirmed, there will be 13.4 million barrels per day on the supply side.
OPEC + was counting on the participation of the G20 in this effort, with a withdrawal of five million barrels per day by the producing countries of that group. However, the Group of 20 did not mention any production cut in its statement after the meeting it held on Friday.
With the pandemic paralyzing fuel consumption worldwide, crude prices have sunk to 18-year lows - which has threatened not only the viability of countries that depend on the revenues from this raw material but also the future of shale oil "(oil obtained from oil shale rocks) in the USA, as it is a more expensive crude oil and companies are not managing to stay afloat with such low prices.
The recent "price war" was launched on 8 March, when Saudi Arabia announced it would increase production from April and offer discounts to customers. This was the strategy defined by Riyadh after Moscow rejected the proposal for an additional cut in production - within the framework of the agreement between the cartel countries and their partners - to sustain the prices of "black gold" in the face of the impact of the Covid-19 coronavirus.
On Thursday, April 9, oil prices soared by 12% in the US, but ended the day by sinking 9% because investors anticipated that production cuts would not reach the 20 million barrels per day they reached be anticipated. In London, the North Sea Brent also went up more than 10% on that day, but ended the day equally at a low point. On Friday the markets were closed.
The International Energy Agency said recently that it feared that a withdrawal of 10 million barrels a day from the market might not be enough to stabilize the market.
