By Sebastine Obasi, with agency report
Members of the Organisation of Petroleum Exporting Countries and its allies, OPEC+ coalition, OPEC+ coalition, yesterday buried their differences and agreed to a 10 million barrel per day production cut, in an effort to revive crude oil prices which recently fell to 18 years low due to the COVID-19 pandemic
The OPEC+ coalition meeting by video conference yesterday, now have the outline of a deal to cut production by 10 million barrels a day, delegates said. Importantly, Russia has agreed to make deep cuts, the delegates said. Oil prices recorded gains, trading up 1.6 percent at $33.37 a barrel.
That reflects concern that the volume of cuts being discussed equates to just a fraction of the demand loss, which some traders estimate at as much as 35 million barrels a day. It’s unclear whether the tentative deal is contingent on the United States also committing to curbs at talks on Friday. An agreement from OPEC+ and a broader alliance including America is crucial to reviving prices that have sunk to an 18-year low.
Not only oil companies, but entire oil-dependent economies need the market to rebound if they’re to balance ailing budgets.
Friday’s Group of 20 talks is expected to provide the forum for U.S. President Donald Trump to respond to OPEC+’s agreement. The Kremlin has insisted that America must do more than just let market forces reduce its own record production. Trump, meanwhile, has said his country’s cut will happen “automatically” as low prices put the shale patch in dire straits. If OPEC+, U.S. and other producers can cement an agreement at the G-20 meeting, the curbs would dwarf any previous market interventions.