The meeting with OPEC and its OPEC+ countries took a u-turn late on Thursday after Mexico refused to accept production cuts offered to it. The country’s Oil Minister Rocio Nahle confirmed this in a tweet on Thursday evening, proposing to cut production by 100,000 barrels per day.
According to reports from Bloomberg, Mexico was expected to reduce its quote by 400,000 barrels per day but proposed 100,000 barrels per day instead. Mexico’s move now threatens the ability of OPEC countries to agree to a production cut as Saudi Arabia and Russia will not agree to cuts if all stakeholders are not on board. Brent Crude closed at $31.48 on Thursday and news of a cut in production did not sway traders.
OPEC Meeting: Earlier, on Thursday, OPEC+ countries had reached a historical deal to cut crude oil output by an initial 10 million barrels per day for two months. The meeting was held via a webinar. Reuters stated that the cut amount to 10 million barrels per day (bpd) or 10% of global supplies, with another 5 million bpd. The 5 million bpd is expected to come from other nations to help deal with the deepest oil crisis in decades. The deal would reportedly last for two years with the cuts implemented gradually, Reuters said.
In prepared remarks, HE Mohamed Arkab, Algeria’s Minister of Energy and President of the OPEC Conference 2020 said, highlighted how important how a successful outcome of the meeting was to the global economy.
“The impact on the oil market is also unprecedented. Large-scale oil demand destruction, and the resulting massive supply and demand imbalance, have the potential to fill global storage capacity quickly and force production shutdowns. The adverse impact on oil exporting country revenues is huge, at a time when these countries are facing the human tragedy of the pandemic and the resulting economic downturn.”
He prayed on member countries to take immediate action moved for credible solutions to bring back price stability and growth in the sector.
Excellencies; We are at a critical turning point, where action is required. The oil market is in an unsustainable freefall. This emergency meeting shall be an opportunity for decisive and immediate action.
The world’s eyes are on this large gathering of producers to provide visionary leadership at a time of crisis. Our meeting here today sends a clear message to the global market that we are taking this situation seriously and moving forward proactively and responsibly to find constructive, effective and credible solutions to rebalance the global oil market.