The agreement means that the oil output will decrease by around 10 percent from May 1.
As the global economy takes a major hit due to the effect of the coronavirus disease (COVID-19) pandemic outbreak, major oil producers led by Saudi Arabia and Russia on Sunday decided to cut output by 9.7 million barrels a day.
Russia and Saudi Arabia reached an agreement after three days of negotiations, two “virtual” meetings by video conference, and a meeting of G20 energy ministers to finally reach what can now be called the biggest oil deal in history.
The agreement means that the oil output will decrease by around 10 percent from May 1. Notably, the global demand for crude has come down by around 20 percent since the outbreak of coronavirus.
It has been learned that Saudi Aramco will release its “official selling prices” for crude in May on Tuesday. As part of the deal Aramco - Saudi's biggest oil producer - has agreed to cut output by 23% and it is expected that the company could press for more reductions in the future.
A compromise was done by OPEC+ — the alliance of OPEC members and non-OPEC producers — to accommodate Mexico, which was not ready to reduce output by 400,000 barrels a day. It was left to US President Donald Trump to intervene in this matter and ease through the special Mexico terms, under which the Mexican government will have to reduce output by much less than other OPEC+ members.
Trump thanked Saudi King Salman and Russian President Vladimir Putin for the "great" deal.
"The big Oil Deal with OPEC Plus is done," he said, adding, "This will save hundreds of thousands of energy jobs in the United States. I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia. I just spoke to them from the Oval Office. Great deal for all!"
The meeting was chaired by Saudi Arabia’s energy minister Prince Abdulaziz bin Salman. Talking about the deal, he said that the cuts would amount to 12.5 million barrels per day, because of higher output in April from Saudi Arabia, the UAE and Kuwait, reported Gulf news.
"I am honored to be a part of this historic moment and historic agreement," Prince Abdulaziz told Reuters.
Referring to the deal, Kremlin spokesman Dmitry Peskov said: “The whole world needs it. That’s because the global economy will be on the brink of uncontrolled chaos in prices, on energy supplies, unless there is such a deal.
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