The meeting of OPEC member states was called on Thursday after enormous US pressure on Saudi Arabia to halt the price war with Russia that Riyadh initiated in early March. It happens just before global demand crashed due to more than half the world is going into lockdown over the coronavirus pandemic. Saudi Arabia boost up the process of the oil production dramatically, driving the price of crude to as low as $20 a barrel this week.
Reports are saying that officials from oil-producing countries have reached a tentative agreement in a meeting on limiting production of oil. OPEC members are hoping to boost the price of crude oil that dive down after a Saudi push to flood the market and Covid-19 lockdowns.
Member countries of the organisation of OPEC reportedly agreed to scale back output by 10 million barrels per day starting on the first day of May. This deal came after an hours-long teleconference on Thursday, Reuters reported citing an OPEC statement. The production cuts will reduce slowly over time, easing to 8 million bpd after two months until the end of 2020.
It is interested to be noted that the organization has yet to confirm the deal, even no party to the talks has spoken about the agreement.
Although this has hurt both Saudi Arabia and Russia – both of which rely on oil revenues to fill their budgets, albeit to a different extent – it has been absolutely devastating for the US shale industry, which relied on a favorable arbitrage between Brent crude and WTI prices to become a major exporter in recent years.