Amid the coronavirus pandemic, the largest oil producers in the world have agreed a historic deal to reduce global oil production by almost 10% to protect the market against the impact of the pandemic. This move marks a truce in the oil price war between Saudi Arabia and Russia. All the members of the OPEC oil cartel and its allies have agreed to withhold almost 10 barrels a day from the next month. The global pandemic has wiped out the demand for fossil fuels and triggered a collapse in global oil prices.
OPEC Secretary General Mohammad Barkindo considered the cuts as “historic”.
“They are largest in volume and the longest in duration, as they are planned to last for two years,” he said.
Opec has called in help from major oil companies outside the alliance including Brazil, Canada, Norway and the US, that may double the size of the unprecedented deal to 20m barrels per day.
The agreement comes just a few days after Riyadh and Moscow committed to pump record crude volumes, inspired by the economic slowdown triggered by coronavirus. The severe restrictions on road transport and aviation lead to decrease the oil demand by an average of 27m barrels a day in April.
The meeting was chaired by Saudi Energy Minister Prince Abdulaziz bin Salman and his Russian and Algerian counterparts. The Saudi Energy Minister confirmed that the discussions “ended with consensus.”
The move was appreciated by US President Donald Trump who welcomed it as a “great deal for all”. He took the Twitter saying it will “save hundreds of thousands of energy jobs in the United States”.
He thanked and congratulated Russian President Vladimir Putin and Saudi Crown Prince and de facto leader Mohammed bin Salman, both of whom he had spoken to. Russian Energy Minister Alexander Novak said he did not expect oil markets to recover before “end of the year, in best case”.