OPEC+ group fails to reach deal on oil output cuts

VIENNA, 10 April 2020: 

The meeting of OPEC+ ministers and other producers ended today without a final agreement on the oil-production cuts following negotiations on stabilising the market after Mexico’s withdrawal.

After 11 hours of talks via videoconferencing, “the parties could not reach any agreement.”

They added that Kazakhstan “remains hopeful that in the future the consensus on collective reduction of oil production will be reached, which will impact positively on the oil industry”.

The negotiations are set to continue during the G20 talks in which the OPEP+ alliance hopes to convince Mexico so that the new agreement on oil-production cut is reached, said sources of the delegates participating in the webinar.

Zamina Alieva, spokesperson of the Ministry of Energy Azerbaijan, said the draft agreement – which seeks a collective reduction of 10 million barrels a day – will be finalised if Mexico agrees to the proposed reduction of 400,000 barrels a day.

The spokesperson further added, that without Mexico’s consent, the agreement will not come into effect.

Mexico withdrew from the meeting without giving its consent to the new agreement.

“Mexico in the meeting to stabilise the oil price of the @OPECSecretariat has proposed a reduction of 100,000 barrels per day in the next 2 months,” Mexico’s energy minister Rocio Nahle tweeted.

She further added that “from 1,781 million barrels per day of production that we reported in March 2020, we will reduce it to 1,681 million barrels per day.”

According to Russian agency RIA Novosti, the negotiations failed because of differences on basic level for the reduction set for the country.

According to agreement plan accessed by official agency TASS, Russia and Saudi Arabia must bring down their production by 2.5 million barrels a day from the current figure of 11 million barrels a day.

In May and June, the production of these petroleum giants is to be reduced to 8.5 million barrels a day.

The OPEC+ alliance countries are to cut their production by 10 million barrels a day, from 43.8 million to 33.8 million.

Every country participating in the cutback would reduce production would be reduced 23%.

The objective is to limit oil production for two years, with gradual change: from July 1 to Dec 31, reductions will be at 10 million barrel a day, while for May and June it is expected to be at 8 million barrel per day while it will be down to 6 million barrel a day between January 2021 and April 2022.

Iran, Libya and Venezuela OPEC members will remain exempted from the extraction quotas due to the falling productions in their petroleum industry because of diverse reasons.