London — OPEC and its allies on Thursday forged a historic agreement to claw back 10 million b/d of crude production, according to sources involved in the negotiations, under political and financial pressure to try and stem a bruising rout in oil prices caused by the coronavirus pandemic.
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The deal would see the 23 members of the OPEC+ alliance, led by Saudi Arabia and Russia, coordinate the world's largest production cut ever, just a month after the two countries launched a vicious price war that upended the oil industry and exacerbated fears of a global recession.
The cuts will cover the months of May and June, before being rolled back to 8 million b/d for the rest of 2020 and then down to 6 million b/d for 2021, sources said.
The coalition will now seek to widen the deal with more countries, including the US and Canada, at Friday's G20 energy ministerial, though neither country is expected to offer more than forecasts of economically driven shut-ins as their contributions.
OPEC has not released a full breakdown of how the cuts will be divvied up, nor the baseline production levels from which the new quotas will be determined. But sources said every member would cut 22% of their output, with Saudi Arabia and Russia both committing to holding their production to 8.5 million b/d for the two months of the deal.
Saudi Arabia, the world's largest crude exporter, said it had ramped up its crude output to a record 12 million b/d this month.
Russia pumped 10.5 million b/d of crude in March, according to S&P Global Platts Analytics.
OPEC+ ministers will meet again June 10 via videoconference to review market conditions and decide whether any changes are needed, sources said.