Oil-producing nations on Sunday completed the largest output cut ever negotiated, an unprecedented coordinated effort by Russia, Saudi Arabia and the United States to stabilize oil prices and, indirectly, global financial markets.
The agreement, cutting production by nearly 10 million barrels a day, appeared to put a floor on oil prices, which have been sinking in recent weeks as the coronavirus pandemic caused major economies to seize up, halting car commuting, air travel and much more.
Before the crisis, 100 million barrels of oil each day fueled global commerce, but demand is now up to 35 percent lower than that daily pace, a plunge that has crushed oil prices. While significant, the cuts agreed to on Sunday are still far short of what is needed to bring oil production in line with demand.
The agreement by the Organization of the Petroleum Exporting Countries, Russia and other producers will slash 9.7 million barrels a day in May and June, or close to 10 percent of the world’s output.
It was not immediately clear if the Trump administration made a formal commitment to cut production in the United States. There is no international mechanism to strictly enforce such production agreements and cheating is common. With prices plummeting, many companies have already reduced output, perhaps to levels approaching those under discussion.
While slightly smaller than a tentative pact reached last Thursday, the deal should bring some relief to struggling economies in the Middle East and Africa and global oil companies, including American firms that directly and indirectly employ 10 million workers. Analysts expect oil prices, which soared above $100 a barrel only six years ago, to remain below $40 for the foreseeable future. The American oil benchmark price was just under $23 a barrel on Thursday.
“This is at least a temporary relief for the energy industry and for the global economy,” said Per Magnus Nysveen, head of analysis for Rystad Energy, a Norwegian consultancy. “The industry is too big to be let to fail.”
The agreement is the result of President Trump’s mediation of a price war that had enmeshed Russia, Saudi Arabia and even Mexico for a couple of days. The deal was struck after more than a week of telephone conversations involving Mr. Trump, who desperately wanted to help the ailing American oil industry, the Saudi crown prince, Mohammed bin Salman, and President Vladimir V. Putin of Russia.
Also on Sunday, millions of Christians celebrated Easter separated from their extended families and fellow believers, watching religious services broadcast on television or streamed online. In Rome, Pope Francis presided over Mass in a largely empty St. Peter’s Basilica, describing “the contagion of hope” as he acknowledged that for many, “this is an Easter of solitude, lived amid the sorrow and hardship that the pandemic is causing, from physical suffering to economic difficulties.”
The impact of the pandemic has intensified around the world. In Britain, where Prime Minister Boris Johnson on Sunday was released from the hospital which had been treating him for Covid-19, the total number of reported coronavirus deaths has surpassed 10,000. And officials in Russia reported more than 2,100 new cases on Sunday, the largest daily increase there since the start of the outbreak.
The United States also recently marked a grim milestone, surpassing Italy in the total number of confirmed coronavirus deaths, reaching its deadliest day on Friday with 2,057 deaths. As of Saturday night, the total stood at more than 20,500. On Sunday, New York, the epicenter of the virus, reported that another 758 more people had died, bringing the total in the state to 9,385.
Source:The New York Times
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