Russia and OPEC Plus are working under the compromise, which is able to resolve the current oil crisis.
The coronavirus pandemic made both Russia and Saudi Arabia to start the negotiation on oil. The delegations have reportedly reached a tentative agreement to cooperatively cut oil production to around a fifth of current rates to stabilize global oil prices.
The oil price is a key aspect of the negotiation on April 10. On Thursday, the OPEC Plus announced that they expect the United States and other global producers to join in the effort to reverse the effects of the COVID-19 pandemic on the oil industry.
According to OPEC Plus, with most of the participants now on board with the plan, the agreement now hinges on Mexico and the US to sign the pact. Mexico reportedly did not agree with the production cuts it was asked to make. Talks with the country and other top global energy ministers will resume on Friday.
Russia’s top oil official, Kirill Dmitriev, told in an interview that they are expecting producers outside of OPEC to join the effort. In fact, Friday meeting on hosted by Saudi Arabia include the energy ministers from the G20.
Oil cut: figures, perspectives, obligations
So far, OPEC documents showed that all of its members have tentatively agreed to cut their output by around 23 percent. Both Russia and Saudi Arabia will each cut 2.5 million barrels per day (bdp), while Iraq will cut its production by 1 million bpd.
According to the experts, even with the unprecedented 15 million bpd production cut, it will likely not be enough to balance the current supply and demand curve.
Since the start of the lockdown in many countries, the demand for fuel has gone down. Over couple of recent months, the global oil demand has plummeted by an estimated 30 million bpd. Unfortunately, the travel restrictions and stay-at-home orders imposed by governments worldwide to mitigate the spread of the novel virus.
While Russia and Saudi Arabia are moving to the agreement, the White House revealed that both OPEC and Russia had talked with Trump over the phone to discuss possible cooperation to resolve the crisis. Officials from OPEC and Russia had previously stated that solving the issue would require the cooperation of all major producers, including the US.