BIG: OPEC and allies, except Mexico, agree to historic 10 mn barrel per day output cut

The Organization of the Petroleum Exporting Countries (OPEC) and allies, with the exception of Mexico, agreed to a historic 10 million barrel per day production cut to contribute to the efforts aimed at stabilizing the market. The ninth extraordinary OPEC and non-OPEC Ministerial meeting, under the chairmanship of Saudi King Abdul Aziz Bin Salman, was held on April 9 following a bitter fallout between Russia and Saudi Arabia.

Read: Iran Says US Oil Production Must Be Known Before OPEC+ Call

As per the agreement, 10 million barrel per day production cut will come into effect from May 1 and will continue for an initial period of two months ending June 30. For the next six months, the total adjustment agreed will be eight million barrel per day output cut which will be followed by a six million barrel per day production cut for a period of 16 months.

Read: OPEC+ Likely To Cut Oil Production If US Joins Talks: Report

Conditional to Mexico's consent

Oil production of October 2018 will be the baseline for the calculation of the adjustments except for Russia and Saudi Arabia which will follow the same baseline level of 11 million barrel per day. The agreement’s validity will remain until April 30, 2022, but the possible extension will be reviewed in December 2021.

Mexico refused to participate in the cuts and left the meeting without giving consent to the agreement which could jeopardise the deal. Mexico’s Secretary of Energy Rocío Nahle tweeted that the country would be willing to cut production by 100,000 barrels per day for the next two months. Since it has not agreed to the proposed deal, it remains conditional on the consent of Mexico.

Read: OPEC+ And Russia Postpone Virtual Meeting On Plunging Oil Prices

Read: Saudi State TV: OPEC Deal Includes 10M Barrel Per Day Cut

(Image Credit: AP)