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 coronavirus lockdowns.The deal, agreed on Sunday via 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.
Opec has yet to announce the deal, but individual nations have confirmed it.The only detail to have been confirmed so far is that 9.7 million barrels per day will be cut by Opec oil producers and allies.
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 coronavirus.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 coronavirus outbreak.
Prior to that, oil prices slumped in March to an 18-year-low after Opec+ failed to agree cuts.
Talks were complicated by disagreements between Russia and Saudi Arabia, but on 2 April oil prices surged after President Trump signaled that he expected the two countries to end their feud.
The initial details of the deal, outlined by Opec+ on Thursday, would have seen the group and its allies cutting 10 million barrels a day or 10% of global supply from 1 May. Another five million barrels were expected to be cut by other nations outside the group such as the US, Canada, Brazil, and Norway.
It said the cuts would be eased to eight million barrels a day between July and December. Then they would be eased again to six million barrels between January 2021 and April 2022.
Prepared according to BBC News article on 12 April 2020