The world’s largest oil producers have agreed to slash production amid plummeting demand thanks to the coronavirus after Mexico finally came onboard the agreement over the weekend.
The Organization of the Petroleum Exporting Countries, Russia and other top oil producing nations will slash production by about 10m barrels a day in May and June.
OPEC said in a statement that the initial, record 10m barrels per day cut would last through June, before tapering to 8m barrels per day for the rest of the year. From January next year, the cuts would decrease to 6m barrels per day, which would continue through April 2022.
To put the 10m cut in perspective, OPEC slashed production by 2.2m barrels in the wake of the 2008 global financial crisis.
However, a 10m cut is unlikely to see significant oil price rises, analysts suggest, given that global oil demand is forecast to drop by 25m barrels per in April alone.