OPEC and Russia agreed to cut production at a shock rate for another month
In total, OPEC+ is cutting production by almost 10 million barrels per day. The main burden will be borne by Russia and Saudi Arabia, but the representatives of these countries stressed that they would like to see stricter compliance with the agreements by other producers.
This agreement is a continuation of the April deal that ended the price war between Russia and Saudi Arabia. In the face of widespread quarantine, which collapsed demand for oil, the confrontation between the two countries led to a sharp drop in prices. The world oil markets and the economies of the producing countries were on the verge of collapse.
Overall, agreements had already been reached before the official video meetings of energy ministers. Prices had just begun to recover, so the countries decided that now was not the time to stop halfway and stop restricting measures.
U.S. Energy Secretary Dan Bruillett tweeted that this is a very important moment: demand for oil is still recovering and many countries are opening their economies".
Opec + is balancing the need to support the oil industry with the desire to avoid too much price hikes at a time when the world economy is on the verge of a deep recession.
But cooperation between Saudi Arabia and Russia will provide an element of stability in a market that is experiencing one of the most volatile periods in its history.