Opec producers and allies in a record oil deal on Sunday agreed to slash global output by 9.7 million barrel to shore up energy markets, which are battered by the ongoing coronavirus pandemic and oil price war between Saudi Arabia and Russia.
Following the decision, oil prices jumped over three per cent on Monday, which was downhill since the beginning of the year due to the Covid-19 pandemic.
US benchmark West Texas Intermediate was up 3.7 per cent at $23.62 a barrel in early Asian trade while Brent crude, the international benchmark, put on 3.1 per cent to $32.45 a barrel., news agency PTI reported.
The meeting between Saudi-dominated Opec producers, chaired by Energy Minister Prince Abdulaziz bin Salman and allies led by Russian Energy Minister Alexander Novakwas, was held via videoconference for an hour on Sunday in an effort to establish this deal.
The deal was earlier struck on April 10 after a week-long marathon of bilateral talks but it still required Mexico’s assent, which in a compromise they agreed to a cut of 9.7 million barrels from May.
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According to Mexican Energy Minister Rocio Nahle, it is down slightly from 10 million barrels per day envisioned earlier.
US President Donald Trump hailed the ‘big oil deal’ with Opec+ saying it will save ‘hundreds of thousands of energy jobs’ in the country and congratulated Russian President Vladimir Putin and Crown Prince Mohammad bin Salman in a tweet.
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!
— Donald J. Trump (@realDonaldTrump) April 12, 2020
According to media reports earlier in the day the Opec+ oil producers agreed to a new deal stipulating a collective reduction in output in a bid to stabilise the market.
“Under the agreement, Russia will reduce its production by 2.5 million barrels per day out of total 9.7 million, with the baseline level of the reduction for Russia set at 11 million barrels per day,” Russian Energy Minister Alexander Novak was quoted as saying.
Opec Secretary General Mohammed Barkindo too welcomed the new deal reached during the extraordinary meeting of the Opec and non-Opec oil producers.
“Secretary General #HEMohammadBarkindo highlighted the importance of the historic agreement reached at the 10th (Extraordinary) OPEC and non-OPEC Ministerial videoconference for the benefits of producers, consumers and the global economy,” the OPEC Secretariat said on Twitter.
Press release: The 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting concludes https://t.co/sprmpT99kB pic.twitter.com/fkmlKcvFVV
— OPEC (@OPECSecretariat) April 12, 2020