- The cut was due to the lockdown situation around the world, caused by the coronavirus, and the resulting reduction in both the demand for and price of oil.
- Mexico had initially blocked the deal at that time.
- Oil prices began to recover by Thursday.
The associations of the world’s oil-exporting countries, including OPEC and Russia, have agreed to reduce production by 10 percent. This is the highest recorded cut in oil production ever. It will be effective from May 1st. The deal came after a video conference was discussed on Sunday.
The cut was due to the lockdown situation around the world, caused by the coronavirus, and the resulting reduction in both the demand for and price of oil. Earlier, in a video conference on Thursday, OPEC Plus— the OPEC and allied countries— announced plans for the deal.
Mexico had initially blocked the deal at that time. OPEC has not yet announced the new deal, but many of the member states have confirmed it separately. It has now been confirmed that OPEC and its allies will reduce the production of oil by 1 million barrels a day.
Meanwhile, oil prices in the Asian market on Monday rose by $1 per barrel. The price of light crude oil has risen by about the same. In the US market, it has been priced at about $26.50 a barrel. US President Donald Trump and Kuwaiti Energy Minister Dr. Khaled Ali Mohammed al-Fadhel tweeted about the deal. The Saudi Energy Ministry and Russia’s state news agency TASS confirmed the deal on Sunday.
Dr. Al-Fadhale tweeted, “By the grace of Allah, then with wise guidance, continuous efforts and continuous talks since the dawn of Friday, we now announce the completion of the historic agreement to reduce production by approximately 10 million barrels of oil per day from members of ‘OPEC +’ starting from 1 May 2020.”