Russia & Saudi Arabia conclude oil dispute in historical deal; This reduction is reported to be nearly 10% of the global supply; This move seeks to combat the dropping oil prices worldwide.
The Organization of the Petroleum Exporting Countries (OPEC) and Russia agreed Sunday to conclude their ongoing oil feud amid the coronavirus, implementing a historic deal that results in them reducing oil production by 9.7 million barrels per day (bpd). This is reported to be approximately 10% of the global supply.
The agreement includes a reduction of 9.7 million bpd for the months of May and June. This is the largest oil production cut ever, surpassing by four times that of the 2008 financial crisis, adding to the list of devastating economic effects coming from COVID-19.
OPEC currently consists of Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, the Republic of the Congo, Saudi Arabia (the de facto leader), the United Arab Emirates, and Venezuela. The term OPEC+ comes from the combination of this list of countries and non-OPEC participants. In this case, Russia and Mexico.
US President Donald Trump praised the deal on Sunday, tweeting, “The big Oil Deal with OPEC Plus is done. 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 president got involved after a dispute between Mexico and the Saudi’s almost further delayed the entire deal.
On a much lesser scale, the United States, Brazil, and Canada are likely to reduce oil production by a combined 3.7%.
The crude price is now floating around $32 per barrel, dropping from over $59 per barrel on January 28, 2020, due to the decreased demand worldwide amid the ongoing pandemic.