OPEC and allies are working on a deal for an unprecedented production cut equivalent to around 10% of global supply, an OPEC source said after U.S. President Donald Trump called on oil nations to stop the oil rout caused by the coronavirus pandemic.
The meeting of OPEC and allies such as Russia has been scheduled for Monday, April 6, Azeri’s energy ministry said, but details were still thin on the exact distribution of production cuts.
Oil prices have fallen to around $20 per barrel from $65 at the start of the year as more than 3 billion people went into lockdown because of the virus, reducing global oil demand by as much as a third or 30 million barrels per day.
Trump said on Thursday he had spoken with both Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman and they agreed to reduce supplies by 10-15 million bpd out of the total global supply of around 100 million bpd.
Trump said he did not make any concessions to Saudi Arabia and Russia, such as agreeing to a U.S. domestic production cut – a move forbidden by U.S. antitrust legislation.
Some U.S. officials have suggested U.S. production was set for a steep decline anyway because of low prices.
“The U.S. needs to contribute from shale oil,” an OPEC source said. Russia has long expressed frustration that its joint cuts with OPEC were only lending support to higher-cost U.S. shale producers.
A second OPEC source said any cut in excess of 10 million bpd must include producers from outside OPEC+, an alliance which includes OPEC members, Russia, and other producers, but excludes oil nations such as the United States, Canada, Norway, and Brazil.
The second source added that OPEC+ was watching the outcome of a meeting between Trump and oil firms later on Friday and that a final figure on cuts depends on participation by all oil producers.
Jason Kenney, the premier of Alberta, Canada’s primary oil-producing province, said on Thursday that Alberta was open to joining a production-cut deal.
Oil prices recovered from the lows of $20 per barrel this week with Brent trading near $33 per barrel on Friday, still less than half its $66 closing level at the end of 2019.