SINGAPORE (ICIS)--OPEC in a statement on Friday said that it has agreed with its allies (OPEC+) to temporarily cut production starting from 1 May.
OPEC and its allies will cut their overall crude oil production by 10m bbl/day starting on 1 May, for an initial period of two months.
The group met earlier on Thursday, with representatives from the 13 OPEC countries and the 10 allies, led by Russia.
The agreement would replace one that lapsed on 31 March, which allowed OPEC and its allies to produce oil without constraint.
OPEC in the statement said the deal was conditional on Mexico’s consent.
In the statement, OPEC said that from 1 July to 31 December 2020, the total cut in production agreed will be 8.0m bbl/day.
It will be followed by cuts of 6.0m bbl/day for a period of 16 months, from 1 January 2021 to 30 April 2022.
OPEC and its allies will have a virtual meeting on 10 June to determine further actions, "as needed to balance the market".
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DEMAND WORRIES OUTWEIGH OPEC
Oil prices fell on Friday on doubts that the deal between OPEC and its allies will be enough to offset the plunge in demand caused by the coronavirus pandemic.
"The road to delivering output cuts that would be big enough to begin offsetting global demand loss of 20-25m bbl/d may be a long and hard one," Vandana Hari, CEO of oil markets analysis firm Vanda Insights, said in a note for investment research and analysis firm Smartkarma.
"Comments from Russia as well as Saudi Arabia in recent days, calling for other non-OPEC producers to join the effort to slash output, clearly indicate their aversion to carrying all the burden of supply restraint within the current 23-member OPEC/non-OPEC framework," she said.
Focus article by Nurluqman Suratman