US President Donald Trump has thanked his Russian counterpart Vladimir Putin and Saudi Crown Prince Mohammad Bin Salman Al Saud for striking a “big” deal with other major crude producers to slash oil production in a bid to stabilise a market that has been jolted by the coronavirus pandemic.
Global oil demand is estimated to have fallen by a third as more than three billion people are locked down in their homes in countries like India due to the coronavirus outbreak that has claimed over 100,000 lives and infected over 1,850,000 across the world.
An oil price war between Russia and Saudi Arabia amidst the global COVID-19 pandemic had threatened to put producers in the US out of business, jeopardising the jobs of thousands of Americans. This forced President Trump to intervene.
Members of the Organisation of the Petroleum Exporting Countries (OPEC) and their allies announced on Sunday that they have agreed to slash production by 9.7 million barrels a day in May and June. The slashing of the global output by about 10 per cent is among the deepest cuts ever agreed to by the world’s oil producers. Trump spoke with the two leaders over phone, the White House said on Sunday.
In separate readouts of the call, the White House said Trump welcomed the commitment by Russia and Saudi Arabia to return oil production to levels consistent with global energy and financial market stability. Trump thanked the two leaders for working with each other, and other oil producing states to calm global energy markets, the White House said.
The top oil-producing countries on Sunday agreed to reduce output in order to boost prices that went down due to the new coronavirus crisis and a Russia-Saudi price war. Trump hailed the agreement as “great deal for all”.
In a tweet, Trump said, “The big Oil Deal with OPEC Plus is done. This will save hundreds of thousands of energy jobs in the United States. I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia. I just spoke to them from the Oval Office. Great deal for all!”
OPEC Secretary General Mohammad Barkindo has described the cuts “historic”. “They are largest in volume and the longest in duration, as they are planned to last for two years,” he said. Opec+, made up of oil producers and allies including Russia, announced plans for the deal on April 9, but Mexico resisted the cuts.
On Friday, Mexican President Andres Manuel Lopez Obrador said his country would cut its output by 100,000 barrels per day. While that amount was far less than what was proposed at Thursday’s meeting, Lopez Obrador added that President Trump offered to cut US production by 250,000 barrels per day to compensate for Mexico.
The United States is not an OPEC+ member. America’s leading oil CEOs recently urged President Trump on to grant the embattled industry access to government programmes aimed at helping companies harmed by the coronavirus pandemic.
The slump to 18-year lows in oil prices was seen a threat to the very survival of many US oil companies. At his daily COVID-19 news conference on Friday, Trump said he spoke to his Mexican counterpart and agreed to a cut as agreed by the OPEC, though he did not confirm the exact size. He said Mexico would reimburse the US at a later date.
“It’s a small amount for us, a large amount for Mexico,” Trump said.