Saudi Arabia, Russia reportedly agree to cut oil output
The PRICE Futures Group Senior Strategist Phil Flynn gives on OPEC’s virtual meeting and its impact on the oil industry.
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The price of oil fell drastically after one country endangered an agreement for a record production cut.
Saudi Arabia and Russia came to an agreement after spending more than 9 hours of talks via a video link, but Mexico refused to participate in the cuts and left the meeting without approving the deal, according to Bloomberg.
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The group called OPEC+ won’t cut output without Mexico’s participation.
U.S. crude is trading down 9 percent, or $2.33 at $22.76. Brent crude is down 4 percent, or $1.36 at $31.48.
The tentative agreement was to cut production by about 10 million barrels a day in May and June, according to delegates.
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Saudi Arabia and Russia would each take output down to about 8.5 million a day, with all members agreeing to cut supply by 23 percent.
The deal should have been able to turn attention on Friday to a meeting of the group of 20 energy ministers.
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Mexico is prepared to cut production by 100,000 barrels a day, but that is nowhere near the 400,000 barrels a day proposed by the group, according to Bloomberg.
Prices have tumbled by half this year as demand has plummeted due to the coronavirus.
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