Several oil countries in the (OPEC +) coalition announced, on Sunday, the completion of an agreement for the largest studied historical reduction in crude oil production by 10 million barrels per day, of which the alliance bears 9.7 million barrels per day.
On Sunday, the (OPEC +) alliance held a supplementary meeting for the previous one, which was held last Thursday, with the aim of setting the final lines on the agreement expected to continue until April 2022.
The agreement includes reducing coalition oil production by 9.7 million barrels per day, and 300,000 bpd, US oil companies said they would cut on their part.
The 300 thousand barrels per share of American companies, it was assumed that the share of Mexico, which rejected the coalition’s decision to cut production by 400 thousand barrels per day, and confirmed that it will reduce its production by 100,000 barrels per day.
The decision to reduce starts from the beginning of next May for a period of two consecutive months, followed by another agreement to reduce production cuts to 8 million barrels per day until the end of 2020.
A third reduction in production, by 6 million barrels per day, or two million barrels less compared to the previous agreement, starts from the beginning of 2021 to April 2022.
At dawn on Monday, Iraqi Oil Minister Thamer Al Ghadhban justified the reason for the gradual decrease in production, saying it was due to a combination of factors, including estimates of slowing global economic growth from 2.4 percent to a contraction of 1.1 percent.
Al Ghadban said in a press statement issued by him, that the gradual reduction in the reduction is also due to the decrease in demand for crude oil, due to the outbreak of the Corunavirus, weak commercial and economic movement and the stop of factories.
Oil futures have lost about 50 percent of their value since the beginning of 2020, to an average of $ 32.5 a barrel now, compared to $ 65 at the end of 2019.
Before the Coronavirus crisis, the average global demand for crude oil, amounting to 100 million barrels per day, would now decline, at least, to 90 million, along with a reduction that Canada, Brazil, the United States, and Norway had made.
Al Ghadban said in this regard: “The United States, Canada, Brazil and Norway, which are among the producing and exporting countries of oil simultaneously, have agreed to reduce production in order to preserve their oil industry”.
He added: “The next two months, which will be important in stabilizing the market, will reduce the production reduction by 16 million barrels per day,” while adding a cut by other countries outside the alliance.