Oil output cuts to start on May 1 and last through June 30, followed by smaller cuts through April 2022
OPEC and its allies agreed early Friday to lower their collective crude oil production by 10 million barrels per day (bpd) until the end of the second quarter of 2020.
Saudi Arabia-led OPEC and Russia-led non-OPEC oil producing nations started their 9th (Extraordinary) OPEC and non-OPEC ministerial meeting via webinar on Thursday at 1445GMT. A statement was released by OPEC on its Twitter account around 0330GMT on Friday.
The group dubbed OPEC+ will lower its crude oil production by 10 million bpd for a two-month period from May 1 until June 30, according to the statement.
For the following six months, from July 1 to Dec. 31, the output cut will be 8 million bpd. This will then be adjusted to a 6 million bpd cut for 16 months, from Jan. 1, 2021 to April 30, 2022.
The baseline for the oil production cuts will be the oil output levels of OPEC+ members from last October. However, heavyweights Saudi Arabia and Russia will apply the cuts based on their output of 11.0 million bpd.
While the current agreement will be valid through April 30, 2022, its extension will be reviewed in December 2021.
OPEC+ members will meet on June 10 this year via webinar to determine whether any other actions are needed to balance the oil market.
Oil prices remain weak
The output cut of 10 million bpd, which is much lower than the market expectation of 15-20 million bpd, caused oil prices to remain weak.
International benchmark Brent crude climbed as high as $33.87 per barrel during the OPEC+ meeting on Thursday to end the day at $32.84 a barrel. However, it was down to $31.82 per barrel at 0500GMT, a 3.1% decline.
American benchmark West Texas Intermediate (WTI) climbed as much as $26.45 a barrel during Thursday trading to close at $25.09 per barrel, but it was down to $23.21 a barrel at the same time, a 7.5% loss.
OPEC+ members failed to agree on March 6 in the Austrian capital Vienna to reach a production cut deal to support oil prices against the negative impact of coronavirus.
With weak global oil demand and a supply glut around the world, oil prices on March 30 hit their lowest level since 2002.