OPEC and its allies on Saturday extended their record restrictions on oil production until July, delegates said after Iraq and Nigeria agreed on deeper cuts to compensate for their failure to comply with recent agreements. At the end of The day on Friday, the G20 virtual ministerial meeting again fought over the language of its final declaration, with Mexico`s opposition in particular slowing down the adoption of a common position. But most experts expect U.S. support for Mexico – repeatedly at the White House coronavirus briefing on Friday – to finally reach an agreement in the sense that OPEC described it later thursday. The coronavirus pandemic has significantly destroyed the demand for oil. Blockages in much of the world mean fewer pipes, fewer flies and less production – all of which reduces the demand for fossil fuels. In recent weeks, as low oil prices put pressure on U.S. producers, companies disagreed on whether they wanted government intervention. But they are united in the frustration of the Saudi-Russian price war. Extremely low prices will lead to reductions in U.S. production – which Russia and Saudi Arabia have long wanted – as oil wells become too expensive to operate.
Saudi Arabia and Russia agreed on Sunday with other oil-producing nations to cut production by 9.7 million barrels per day for the next two months to stem a drop in oil prices caused by the coronavirus pandemic and the feud between Moscow and Riyadh. According to the sources, there is still no agreement on whether an OPEC production meeting is to take place on Thursday, the main obstacle being relations with countries that have not achieved the deep supply cuts required under the existing pact. The group known as OPEC limited its crude oil production by 9.7 million bpd between May 1 and July 31 to mitigate the negative effects of the new coronavirus on global oil demand. It was not immediately clear whether the Trump administration has made a formal commitment to cut U.S. production, but in the face of falling prices, many companies in the country have already cut production. There is no international mechanism to strictly enforce these production agreements and fraud is common. OPEC members and their allies began talking last week in the hope that the United States, Canada and other Western producers would accept explicit cuts of up to four million or five million barrels per day. Instead, U.S. officials simply assured that crude oil production would be reduced over time, in addition to the voluntary reductions that have already begun at some U.S. companies. The agreement announced sunday will amount to 7.7 million barrels per day from July to December and 5.8 million barrels per day from January 2021 to April 2022.
The 23-member OPEC Oil Nations agreed on Saturday to extend the duration of the agreement by an additional month until the end of July 31. After a drop in demand for coronaviruses and a devastating explosion in prices, the alliance of the 23 nations of the Organization of Petroleum Exporting Countries and its allies is cautious in rebalancing a global oil market in the early stages of recovery. Led by Saudi Arabia and Russia – and remotely provoked by the Trump administration – the group agreed in April to cut production by 9.7 million barrels per day. In May and June, OPEC agreed to cut production to a record 9.7 million barrels per day, or about 10% of world production, in order to increase prices due to lower demand related to lockdown measures to curb the spread of coronavirus. Prince Abdulaziz also pointed out that some OPEC member states, which failed to fully comply with their individual production cuts in May and June, will reduce their crude oil production in July, August and September.