Saudi Arabia, Russia and their allies will press Mexico on Friday to join an accord for collective oil production cuts equivalent to 10% of global supplies, Reuters reports, after the two heavyweights agreed on the cuts but Mexico “walked out” of talks yesterday at the last minute.
The agreement and last-minute walkout of Mexico made for live theatre on social networking sites yesterday. An after-hours statement from Mexico’s president, and then a phone call from President Trump in which the two agreed to cut production, adds even more intrigue to today’s meeting of G20 energy ministers in which all parties hope to reach a deal.
Prince Abdel Abdulaziz bin Salman, Saudi Arabia’s Minister of Energy.
Oil markets have lagged significantly since the start of the global economic slowdown caused by the coronavirus pandemic. Demand has plummeted, and an oil price war between Saudi Arabia and Russia caused supplies to soar and stockpiles to build.
The price war has also caused consternation on Capitol Hill, where senators from oil-producing states have threatened Saudi Arabia with legislative action in order to push it to end the war, saving U.S. oil businesses from bankruptcy.
“Having affordable, reliable, accessible energy supply is considered a necessity to enable basic services, including health care, and help our efforts in assisting economic recovery,” Prince Abdulaziz said in an opening speech to a video-conference of the G20 energy ministers, happening this morning.
As Reuters notes, “even if OPEC+ secures agreement to cut the equivalent of 15% of global production, it still leaves the market with a huge overhang of crude as demand has plunged by as much as 30%.”
