The Organization of the Petroleum Exporting Countries and allied oil producers will decide on Friday whether Mexico’s proposal to reduce its daily output is enough to secure a deal to cut global oil production.
Mexican President Andres Manuel Lopez Obrador announced the cuts after he spoke with US President Donald Trump.
“When I told him [US President] that it was 100,000 (barrels) and we couldn’t do any more, he very generously said to me that they were going to help us with the additional 250,000 to what they are going to contribute,” Obrador said at a news conference on Friday as cited by Reuters.
Mexico’s reluctance to support the proposed curbs, under which the country is required to cut daily production by 400,000 barrels, remains the main stumbling block to finalize the long-anticipated oil deal that could boost sinking crude prices.
OPEC released a statement on Thursday stipulating that global crude oil production will be reduced by 10 million barrels per day. The historic cuts will be effective for two months starting from May 1, and the figure will then drop to eight million barrels a day between 1 July 2020 and 31 December 2020.
The accord was agreed by all the OPEC and non-OPEC oil producing countries except for Mexico – as a result, the deal was declared “conditional.”
The body has not released any new statement after the Mexican proposal. Mexico’s commitment is less than OPEC wanted it to make. Even with the US’ help the total reduction amounts to 350,000 barrels per day, meaning that other signatories will have to compensate for an additional 50,000 barrels.
Oil markets are closed on Good Friday. When the reports on the new deal emerged one day earlier, crude prices rose more than 12 percent before losing nearly all gains later in the session. US West Texas Intermediate fell to $22.76 per barrel, while international benchmark Brent ended trading at $31.48 on Thursday.
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