İrem GÖL -TDO- Opec countries and allies led by Russia have agreed in principle to cut their oil output by more than a fifth and said they expected the United States and other producers to join in their effort to prop up prices hammered in the coronavirus crisis. But there was some confusion after Mexico apparently refused to sign up to its share of cuts under the deal, which would have been 400,000 barrels per day.
The cuts by the oil cartel plus its allies, a group known as Opec+, amount to 10 million barrels per day, or 10% of global supplies. Reductions of 5 million barrels per day are expected to come from other nations to help the deepest oil crisis in decades. Global fuel demand has plunged by around 30 million barrel per day, or 30% of global supplies, as steps to fight the virus have grounded planes, cut vehicle usage and curbed economic activity.
An unprecedented 15 million barrels per day still would not remove enough crude to stop the world’s storage facilities quickly filling up. And far from signalling any readiness to offer support, the US president, Donald Trump, has threatened Opec with sanctions if it does not fix the oil market’s problem of oversupply. Brent oil prices, which hit an 18 year low last month, were around $32 a barrel on Thursday, half of their level at the end of 2019.