OPEC producers and allies have agreed a record oil deal that will slash global output by about 10% after a slump in demand caused by Corona-virus lock downs.
The deal, agreed via a video conference, is the largest cut in oil production ever to have been agreed. OPEC+, made up of oil producers and allies including Russia, announced plans for the deal on 9 April, but Mexico resisted the cuts.
On Monday in Asia, oil rose over $1 a barrel in early trading with global benchmark Brent up 3.9% to $32.71 a barrel and US grade West Texas Intermediate up 6.1% to $24.15 a barrel.
Shares in Australia jumped 3.46% led by energy exporters, but Japan’s Nikkei 225 fell 1.35% on continued concerns of poor global demand because of the spread of the Corona-virus.
“This is an unprecedented agreement because it’s not just between OPEC+, but also the largest supplier in the world which is the USA, as well as other G-20 countries which have agreed to support the agreement.
US President Donald Trump and Kuwait’s energy minister Dr Khaled Ali Mohammed al-Fadhel tweeted the news, while Saudi Arabia’s energy ministry and Russia’s state news agency Tass both separately confirmed the deal on Sunday.
Global oil demand is estimated to have fallen by a third as more than three billion people are locked down in their homes due to the Corona-virus outbreak.
The bulk of the output cuts are predicated on Russia and Saudi Arabia cutting 2.5 million barrels per day from agreed – and somewhat inflated – levels of 11 million barrels per day.
BBC / ABC Flash Point Oil News 2020.