By Javier Blas
After a week-long marathon of bilateral calls and four days of meetings with government ministers from around the world — including the OPEC+ alliance and the Group of 20 nations — an agreement finally emerged to tackle the impact of the global pandemic on demand.
“Can you imagine where we were on March 6 and where we are today,” the minister said, referring to the day when at an OPEC+ meeting Saudi Arabia and Russia clashed over policy.
Prince Abdulaziz, who declared himself “sleepless and exhausted” after nearly a week of conference calls, said the deal was “unbelievable” and over time would reduce the oversupply in the market.
Under the deal, Saudi Arabia will cut its production just a fraction under 8.5 million barrels a day — its lowest level since 2011. The OPEC+ deal measures the Saudi cut from a baseline of 11 million barrels a day, the same as Russia. But in reality the kingdom’s production will decline from a much higher level. In April, Saudi Arabia boosted output to a record 12.3 million barrels a day as part of its war with Russia for market share.
Prince Abdulaziz said that measuring the OPEC+ cuts from the expected production levels in April would result in a larger cut which he pegged at near 12.5 million barrels a day. On top, he said that other countries would contribute either with voluntary cuts or as their oil companies cut drilling activity in response to lower oil prices.
“We are very grateful for the help that is coming from other producers that aren’t OPEC+,” Prince Abdulaziz said.
The U.S., Brazil and Canada will contribute another 3.7 million barrels on paper as their production declines, according to delegates. OPEC officials were still waiting to hear more from Group of 20 members — though it’s not clear if those numbers will represent real cuts or just production idled because of market forces.
“We want to regain the stability of the oil market,” Prince Abdulaziz said.