OPEC, oil nations agree to nearly 10 million barrel cut amid coronavirus

OPEC, Russia and other oil-producing nations on Sunday finalized an unprecedented production cut of nearly 10 million barrels, or a tenth of global supply, in hopes of boosting crashing prices amid the coronavirus pandemic and a price war, officials said.

“This could be the largest reduction in production from OPEC for perhaps a decade, maybe longer,” said U.S. Energy Secretary Dan Brouillette, who credited President Donald Trump’s personal involvement in getting dueling parties to the table and helping to end a price war between Saudi Arabia and Russia.

Oil prices have collapsed as the coronavirus and the COVID-19 illness it causes have largely halted global travel and slowed down other energy-chugging sectors such as manufacturing. It has devastated the oil industry in the U.S., which now pumps more crude than any other country.

But some producers have been reluctant to ease supply. The cartel and other nations on Sunday agreed to allow Mexico to cut only 100,000 barrels a month, a sticking point for an accord initially reached Friday after a marathon video conference between 23 nations. The nations together agreed to cut 9.7 million barrels a day throughout May and June.

American shale producers struggle

The group reached the deal just hours before Asian markets reopened Monday and as international benchmark Brent crude traded at just over $31 a barrel and American shale producers struggle.

Video aired by the Saudi-owned satellite channel Al-Arabiya showed the moment that Saudi Energy Minister Prince Abdulaziz bin Salman, a son of King Salman, assented to the deal.

Read: Asian Shares Fall, Oil Gains After OPEC Plus Strikes Deal

Read: Iran Speaks About OPEC Deal To Cut Crude Production

“I go with the consent, so I agree,” the prince said, chuckling, drawing a round of applause from those on the video call.

But it had not been smiles and laughs for weeks after the so-called OPEC+ group of OPEC members and other nations failed in March to reach an agreement on production cuts, sending prices tumbling. Saudi Arabia sharply criticized Russia days earlier over what it described as comments critical of the kingdom, which finds itself trying to appease Trump, a longtime OPEC critic.

Even U.S. senators had warned Saudi Arabia to find a way to boost prices as American shale firms face far-higher production costs. American troops had been deployed to the kingdom for the first time since the Sept. 11, 2001, attacks over concerns of Iranian retaliation amid regional tensions.'

Read: Trump Hails 'big Oil Deal' With OPEC+ After Top Oil Producers Agree On Record Output Cuts

Read: OPEC HQ Deserted As Ministers Hold Videoconference