Crude oil prices are at their lowest in 18 years, prompting the G20 to cut production. The OPEC+ group of nations had already agreed on large production cuts, but sought US and Canadian support.
The G20 group of nations made the decision on Friday to cut crude oil production in May and June, in an effort to stabilize the effects of the coronavirus pandemic on markets. This would be the largest supply deal of its kind.
Earlier, the OPEC+ alliance led by Saudi Arabia and Russia had also agreed to cut oil production to 10 million barrels per day. However, confirmation on this deal was delayed due to Mexico's defiance to cut its production.
The alliance was seeking cutdowns from oil producing G20 nations such as US and Canada to supplement the deal. "We think that in addition to the 10 million b/d that OPEC+ will cut there will be another 5 million b/d cut by countries that are not included in OPEC+, so in total the cut in May and June will be 15 million b/d," said Russian energy minister Alexander Novak.
"We commit to ensure that the energy sector continues to make a full, effective contribution to overcoming COVID-19 and powering the subsequent global recovery. We commit to take all the necessary and immediate measures to ensure energy market stability," said a statement by the G20 nations.
Saudi Arabia would be seeing a decrease in production by 3.5 million b/d and, Russia would reduce 2 million b/d from their current levels. Mexico refused the prescribed 400,000 b/d cut, but offered a reduction of 100,000 b/d instead. The cuts would gradually be reduced, till April 2022.
US President Donald Trump offered to help Mexico to "pick up some of the slack," in order to make the deal easier.
Shutdowns across the world have brought down the demand for oil by nearly a third. Crude oil prices are at their lowest in 18 years. A price war earlier this month between Saudi Arabia and Russia, and the Mexican stand off have proved to be barriers in the bid to stabilize global oil markets.