A table with the OPEC logo is seen during the presentation of OPEC's 2013 World Oil Outlook in Vienna, Austria, November 7, 2013. /Reuters
OPEC and allies led by Russia agreed on Sunday to a record cut in output to prop up oil prices amid the coronavirus pandemic and said they had an unprecedented deal with fellow oil nations, including the United States, to curb global oil supply by 20 percent.
Measures to slow the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining budgets of oil producers and hammering the U.S. shale industry, which is more vulnerable to low prices due to its higher costs.
The group, known as OPEC+, said it had agreed to reduce output by 9.7 million barrels per day (bpd) for May and June, after four days of talks and following pressure from U.S. President Donald Trump to arrest the price decline.
The biggest oil cut ever is more than four times deeper than the previous record cut in 2008. Producers will slowly relax curbs after June, although reductions in production will stay in place until April 2022.
"The big Oil Deal with OPEC+ is done. This will save hundreds of thousands of energy jobs in the United States," Trump wrote on Twitter, thanking Russian President Vladimir Putin and Saudi King Salman for pushing the deal through.
"I just spoke to them... Great deal for all," Trump said.
Screenshot from Trump's Twitter.
The Kremlin confirmed the deal in a statement, saying the two leaders agreed on the "great importance of an agreement in the 'OPEC+' format, during a phone conversation."
OPEC+ said in a draft statement seen by Reuters it expected total global oil cuts to amount to more than 20 million bpd, or 20 percent of global supply, effective May 1.
Three OPEC+ sources said effective oil output cuts would include contributions from non-members, steeper voluntary cuts by some OPEC+ members and strategic stocks purchases by the world's largest consumers.
The sources said non-members Brazil, Canada, Norway and the United States would contribute 3.7 million bpd. Gulf members of the Organization of the Petroleum Exporting Countries will be cutting output more steeply than agreed, OPEC+ sources said.
The sources said the International Energy Agency (IEA) would announce purchases into stocks by its members on Monday to the tune of 3 million bpd in the next couple of months.
The IEA did not immediately respond to a request for comment.
(With input from Reuters, AFP)