International

Mexico Says It Made OPEC+ Oil-Output Cuts Deal With Trump

Published on : 2020-04-10

Mexico said it has reached an agreement with OPEC+ for deep oil-production cuts, after an intervention from U.S. President Donald Trump resolved an overnight impasse.


However, delegates from the Organization of Petroleum Exporting Countries said they were unaware of the terms of the deal to which Mexican President Andres Manuel Lopez Obrador was referring.


Speaking at a press conference on Friday morning, the Mexican leader said he spoke to Trump and now had a deal for a level of production cuts that was more acceptable than the 400,000 barrel-a-day reduction proposed by OPEC+ on Thursday.


If the standoff between Mexico and OPEC+ has been resolved, it opens the way for a historic effort to revive the oil market from a debilitating coronavirus-induced slump. The deal by the coalition of nations known as OPEC+, which dwarfs previous interventions, would end the price war between Riyadh and Moscow that helped push oil down to the lowest in almost two decades.


All of that was in doubt on Thursday night after Saudi Arabia made the whole deal dependent on Mexico’s participation, despite the country’s refusal to cut as deeply as required. The kingdom’s energy minister, Prince Abdulaziz bin Salman, was pinning an accord to remove more than 10% of global production from the market on an argument about a few hundred thousand of barrels, but he was determined that the burden of cuts must be shared as widely as possible.


Attention now turns to a call underway between G-20 energy ministers, where OPEC+ is hoping to secure commitments for 5 million barrels a day of production cuts in addition to the initial 10 million reduction in its own output proposed on Thursday.


That would still be just a fraction of the 20 million to 35 million barrels a day in estimated global demand losses as billions of people stay confined to their homes and businesses close to slow the spread of the coronavirus.


West Texas Intermediate crude plunged more than 9% on Thursday, settling at below $23 a barrel, as traders and analysts said the cut was too small to prevent an oversupply of crude.

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