OPEC agrees to cut oil barrel production after demand drops

President Donald Trump has said “hundreds of thousands” of energy jobs are set to be saved after a deal with OPEC Plus was finalised.

Intergovernmental group OPEC (Organisation of the Petroleum Exporting Countries) and its allies on Sunday agreed to a historic deal to cut oil output by 9.7 million barrels a day, or a tenth of global supply, during the coronavirus pandemic.

The unprecedented reduction will take place from May to June this year, and then will continue to keep gradually decreasing curbs on production in place for two years until April 2022.

On Sunday, the US president confirmed a deal had been reached and expressed his delight over the decision.

Mr Trump tweeted: “The big Oil Deal with OPEC Plus is done. This will save hundreds of thousands of energy jobs in the United States. I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia. I just spoke to them from the Oval Office. Great deal for all!”

It comes after a price war of oil broke out between Saudi Arabia and Russia at the beginning of March.

The two countries failed to agree to a deal to restrain output and help stabilise prices – hit by a plunge in demand because of the COVID-19 outbreak.

Global oil demand is estimated to have fallen by a third as more than 3 billion people are locked down in their homes.

This has subsequently destroyed demand for fuel and driven down oil prices, straining budgets of oil producers and hammering the US shale industry, which is more vulnerable to low prices due to its higher costs.

President Trump urged OPEC to resolve the issue earlier this week after voicing concerns about the future of US citizens’ jobs in the energy sector.

Source: Read Full Article