OPEC + reached an agreement to cut production by 9.7 million barrels a day

The OPEC + emergency video conference hosted by Saudi Arabia ended in the early morning of April 13, Beijing time. Several Saudi media reported that the participating countries finally reached an agreement on production reduction, with the first phase reducing crude oil production by 9 million 700 thousand barrels per day in May and June this year, which is also the largest production reduction agreement reached since the establishment of the OPEC + mechanism. Prior to this, Saudi Arabia and Russia and other countries reached an initial intention to reduce production at the OPEC + mechanism emergency meeting held on September 9, and planned to reduce production by 10 million barrels of crude oil per day in May and June, but Mexico was not satisfied with its share of 400000 barrels per day reduction, saying it was only willing to reduce production by 100000 barrels per day, which led to the failure of the agreement.

At the latest meeting, countries agreed to reduce Mexico's share of production cuts to 100000 barrels a day. According to the agreement, the production reduction plan will be implemented from May 2020 for two years, and will be reviewed by relevant countries in December 2021. The plan is divided into three stages, in which 10 million barrels per day will be cut from May to June 2020, 8 million barrels per day from July to December 2020, and 6 million barrels per day from January 2021 to April 2022. The production cuts in Saudi Arabia and Russia are based on 11 million barrels per day, while the production cuts in other countries are based on their respective production cuts in October 2018. OPEC + mechanism was established in 2016. It is composed of 23 non OPEC oil producing countries such as Saudi Arabia led OPEC and Russia. However, the United States, the largest oil producing country in the world, did not participate in this mechanism.