An unprecedented deal to cut global oil production in a bid to raise prices appeared to be coming together Friday after President Trump offered to reduce U.S. oil production Friday to “pick up some of the slack” and encourage holdout Mexico to join the accord.
Mr. Trump said he spoke by phone on Friday with Mexican President Andres Manuel Lopez Obrador, who was resisting a proposal jointly brokered by Saudi Arabia and Russia Thursday that would require Mexico to cut production by about 400,000 barrels per day. Mr. Lopez Obrador said he wouldn’t cut production by more than 100,000 barrels.
Mr. Trump said he has proposed to cut U.S. oil production by 250,000 barrels a day or so to make up the difference.
“I agreed to pick up some of the slack,” Mr. Trump said. “They [Mexico] would make it up to us at a later date. It could be in a different form. I don’t know whether or not that’s going to be acceptable to the other oil-producing nations.”The president said that due to plummeting oil prices, the U.S. has been producing less oil anyway.
Mr. Trump has pushed hard for the agreement as higher-cost American oil drillers have been devastated by a month-long price war between Saudi Arabia and Russia. The oil glut has been exacerbated by the collapse of demand brought on by the coronavirus pandemic that has paralyzed economies across the world.
OPEC nations and Russia say they will cut joint production by about 10 million barrels per day immediately and keep production down through the end of 2021 in a bid to boost prices.
All told, the producers’ agreement would take about 15 millions barrels a day off of the market — roughly 15 percent of current global production. But with inventory high and demand likely to stay low for a long time, analysts said it was not clear how even such a major coordinated joint cut would affect oil prices.