REUTERS/Sergei Karpukhin
- The multiweek oil-price war between Russia and its OPEC allies was finally resolved on Sunday as the international consortium agreed to cut global crude oil production by almost 10%.
- OPEC+ announced it will slash production by 9.7 million barrels a day for May and June.
- That’s more than four times the cuts approved during the last financial crisis.
- WTI crude oil climbed 6.5% to $24.32 a barrel at 9:15 p.m. in New York, while Brent crude increased 3.7% to $33 a barrel.
- Watch oil trade live on Markets Insider.
The multiweek oil-price war between Russia and its OPEC allies has finally been resolved. The international consortium agreed on Sunday to cut global crude oil production by almost 10%.
OPEC+ announced it will slash production by 9.7 million barrels a day for May and June, roughly in line with the 10 million figure that was floated late last week.
WTI crude oil climbed 6.5% to $24.32 a barrel at 9:15 p.m. in New York. Futures surged as much as 9% shortly after opening at 6 p.m., but quickly reversed course and traded as much as 4% lower for a stretch. Brent crude rose 3.7% to $33 a barrel.
The historic accord comes after four days of tough negotiations. It also marks the biggest oil-production cut on record, coming in at more than four times what was approved during the last financial crisis.
Also as part of the agreement the US, Brazil, and Canada will contribute an additional 3.7 million barrels on paper amid a production decline, while other Group of 20 nations will offer 1.3 million, Bloomberg reported.
Further, production cuts will persist beyond the initial two-month period, albeit at a tapered pace. After June, it will be decreased to 7.7 million barrels a day through year-end. Then it will be cut again to 5.8 daily barrels from the start of 2021 through April 2022. The deal goes into effect on May 1.
The agreement marks the end of a price war between Russia and primarily Saudi Arabia that transpired at a time when the global coronavirus outbreak was already sapping demand for oil. By threatening to boost production and flood the market with cheap oil, the warring sides pushed prices for WTI crude prices down as much as 67% year-to-date. The commodity plunged more than 50% in March alone.
President Donald Trump tweeted about the deal on Sunday.
“The big Oil Deal with OPEC Plus is done,” he said. “This will save hundreds of thousands of energy jobs in the United States.”
Trump continued: “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!”
