OPEC+ Finalizes 970,000 Barrel Production Cut... 'Oil Prices Start to Rise'

[Asia Economy Reporter Naju-seok] Oil-producing countries including Saudi Arabia and Russia have reached a final agreement after a marathon meeting to reduce daily oil production by 9.7 million barrels starting next month. This is the largest scale cut, amounting to 10% of the daily production of oil-producing countries.

According to Bloomberg and others on the 12th (local time), energy ministers from 10 OPEC member countries including Saudi Arabia and 13 non-OPEC member countries including Russia held an OPEC+ video conference on the same day and succeeded in reaching this agreement.

Initially, OPEC+ (the coalition of OPEC member countries and non-OPEC oil-producing countries) agreed on a cut of 10 million barrels on the 9th, but failed to reach a final agreement due to Mexico's opposition. Mexico was asked to reduce daily oil production by 400,000 barrels but insisted it could only accept a 100,000-barrel cut. Although U.S. President Donald Trump proposed that the U.S. would reduce oil production on behalf of Mexico, Saudi Arabia, the leader of OPEC, rejected the proposal, leading to a crisis of negotiation breakdown. After behind-the-scenes contacts over the weekend among the U.S., Russia, and Saudi Arabia on this issue, Mexico's demands were fully accepted, allowing the agreement to be reached.

With the consent of all OPEC+ oil-producing countries including Mexico, a cut of 9.7 million barrels per day will be implemented from the 1st of next month until the end of June. The cut will be based on production levels from October 2018. From July to the end of this year, the daily cut will decrease to 7.7 million barrels, and from January next year to April 2022, the daily cut will be 5.8 million barrels. OPEC+ plans to hold a video conference on June 10 to assess market conditions.

The Wall Street Journal (WSJ) reported that since oil-producing countries outside OPEC+ may also participate in production cuts, the total global cut could exceed 10 million barrels per day. This takes into account sources stating that non-OPEC+ oil-producing countries such as the U.S., Canada, and Brazil will reduce oil production by 3.7 million barrels per day. On the 10th, energy ministers from the Group of 20 (G20) held a separate video conference from OPEC+ and reached an agreement to "take necessary measures for the stability of the energy market."

President Trump expressed his welcome on Twitter, saying, "A big deal with OPEC+ has been made." He added, "Hundreds of thousands of energy-related jobs will be saved in the U.S.," and thanked Russian President Putin and Saudi King Salman bin Abdulaziz Al Saud.

Due to the impact of the production cut agreement, oil prices showed an upward trend. As of 10 a.m. Korean time, West Texas Intermediate (WTI) rose 5.8% to $24.08 per barrel, and Brent crude rose 4% to $32.77 per barrel.

This content was produced with the assistance of AI translation services.