The Organization of Petroleum Exporting Countries (OPEC) and non-OPEC countries led by Russia, have agreed to cut down production by 10 million barrels per day, starting from May 1, 2020.
This decision was taken on Thursday 9th April, 2020 after an extraordinary Ministerial Meeting held via webinar, under the Chairmanship of HRH Prince Abdul Aziz Bin Salman, Saudi Arabia’s Minister of Energy, and co-Chair HE Alexander Novak, Minister of Energy of the Russian Federation.
The meeting was called by Saudi Arabia, the de facto leader of the OPEC, last week to stem the tides of oil prices, which have gone south, following a fallout to agree on a supply cuts early in March.
According to a release by OPEC,”In the meeting, the OPEC and non-OPEC oil-producing countries participating in the Declaration of Cooperation, reaffirmed their continued commitment in the Declaration of Cooperation to achieve and sustain a stable oil market, the mutual interest of producing nations, the efficient, economic, and secure supply to consumers, and a fair return on invested capital.”
The release stated that to address the current challenges facing the oil market, participating countries, excluding Mexico, agreed to:”Reaffirm the Framework of the Declaration of Cooperation, signed on 10 December 2016 and further endorsed in subsequent meetings; as well as the Charter of Cooperation, signed on 2 July 2019. “Adjust downwards their overall crude oil production by 10.0 mb/d, starting on 1 May 2020, for an initial period of two months that concludes on 30 June 2020. For the subsequent period of 6 months, from 1 July 2020 to 31 December 2020, the total adjustment agreed will be 8.0 mb/d. It will be followed by a 6.0 mb/d adjustment for a period of 16 months, from 1 January 2021 to 30 April 2022. The baseline for the calculation of the adjustments is the oil production of October 2018, except for the Kingdom of Saudi Arabia and The Russian Federation, both with the same baseline level of 11.0 mb/d. The agreement will be valid until 30 April 2022, however, the extension of this agreement will be reviewed during December 2021.
“Call upon all major producers to contribute to the efforts aimed at stabilizing market.
“Reaffirm and extend the mandate of the Joint Ministerial Monitoring Committee (JMMC) and its membership, to closely review general market conditions, oil production levels and the level of conformity with the Declaration of Cooperation and this Statement, assisted by the Joint Technical Committee (JTC) and the OPEC Secretariat.
“Reaffirm that the Declaration of Cooperation conformity is to be monitored considering crude oil production, based on the information from secondary sources, according to the methodology applied for OPEC Member Countries.
“Meet on 10 June 2020 via webinar, to determine further actions, as needed to balance the market.”