Trump Thanks King Salman and Putin for OPEC Deal
Hülya Karahan: Production Editor
On Sunday, US President Donald Trump described the OPEC Plus agreement as “great and will protect hundreds of thousands of American energy jobs”, thanking the King Salman bin Abdulaziz and Russian President Vladimir Putin.
“The grand agreement with OPEC Plus has been fulfilled. This will save hundreds of thousands of jobs in the US energy sector,” Trump wrote on Twitter.
The big Oil Deal with OPEC Plus is done. This will save hundreds of thousands of energy jobs in the United States. I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia. I just spoke to them from the Oval Office. Great deal for all!
— Donald J. Trump (@realDonaldTrump) April 12, 2020
“I would like to thank and congratulate Russian President (Vladimir) Putin and Saudi King Salman. I have just spoken to them from the Oval Office. It is a great deal for everyone.”
On Sunday, Russian President Vladimir Putin and Trump stressed the “great importance” of OPEC and its partners agreement on the historic reduction of oil production.
The Kremlin said in a statement that the two leaders stressed, in a telephone call, the “great importance of the agreement in the OPEC Plus formula on reducing oil production.”
The Kremlin statement also referred to a telephone conversation between Putin and Trump and Saudi King Salman.
The statement said that the three leaders “endorsed the agreement reached within the OPEC Plus group on reducing oil production in stages and voluntarily, with the aim of establishing stability in the global markets and ensuring the resilience of the global economy.”
The Saudi Ministry of Energy said on Twitter that the meeting “ended with the consensus of OPEC + producers to cut production from next May.”
Kuwaiti Oil Minister Khalid Al-Fadil confirmed on Twitter “the completion of the historic agreement to reduce production by approximately 10 million barrels of oil.
بفضل من الله ثم بالتوجيهات الحكيمة والجهود المتواصلة والمحادثات المستمرة منذ فجر الجمعة،
نعلن الآن عن اتمام الاتفاق التاريخي على خفض الانتاج بما يقارب 10 ملايين برميل من النفط يومياً من اعضاء “اوبك +” ابتداء من الأول من مايو 2020 pic.twitter.com/NF3o5Hmt6z
— د. خالد الفاضل (@Dr_Alfadhel) April 12, 2020
Kuwaiti Oil Minister Khalid Al-Fadil: “By the grace of God, then with wise guidance, continuous efforts and continuous talks since the dawn of Friday,
We now announce the completion of the historic agreement to reduce production by approximately 10 million barrels of oil per day from members of “OPEC +” starting from May 1, 2020.”
OPEC Plus said in a draft statement, that the total global oil production cuts in effect from May 1, 2020 will exceed 20 million barrels per day.
The terms of the new deal were discussed on April 9 at a video conference, which lasted more than 10 hours. Countries agreed to reduce production by 10 million barrels per day – about 23% of their total production. It was planned that the restrictions would gradually be relaxed: 8 million barrels per day, or about 18% of total production from July to December 2020, and 6 million barrels per day, or 14% of production from January 1, 2021 to April 30, 2022 d. In December 2021, the agreement should be revised. Most countries will reduce production from the level of October 2018, Russia and Saudi Arabia – from a base level of 11 million barrels per day. Both countries will first lower their daily production to 8.5 million barrels, and then raise it – first to 9 million barrels, and then to 9.5 million barrels. Gas condensate is not taken into account in the calculations.
At first 22 countries joined the agreement, and its fate depended on Mexico, from which they expected a decrease of 400,000 barrels per day. On April 10, the G20 meeting was held, where they also discussed the restoration of balance in the oil market. After it, Russian Energy Minister Alexander Novak said that the terms of the OPEC + deal were agreed upon by all 23 countries participating in the agreement.
OPEC Secretary General Mohammad Sanusi Barkindo noted that the excess in the oil market could reach about 14.7 million barrels per day, and global crude oil storage capacities would be exhausted by the end of May.
Different versions of the agreement were considered – for a year, for two and for four, Novak said. The two-year option was chosen as the most effective for the market and to give a signal of serious intentions. The United States, Norway, Argentina and Canada, as well as the Organization of African Oil Producers, also announced their readiness to reduce production. US Energy Secretary Dan Bruyett said at a G20 meeting that he predicted that by the end of 2020, US oil production for market reasons would drop by almost 2 million barrels per day.
According to Novak, the countries that are not members of OPEC + will reduce their daily production by 5 million barrels in total. The statement following the G20 meeting does not contain information on specific steps to reduce production. The organization creates a short-term focus group, which will develop measures to stabilize the market.
The fact that OPEC + will ultimately reduce daily production not by 10 million, but by 9.7 million barrels is not so important, it’s much more important that the agreement was finalized, says Fitch analyst Dmitry Marinchenko. How much the output of countries outside OPEC + will eventually fall depends on the dynamics of oil demand, he argues, it could be 5 or 10 million barrels per day.
Trump Thanks King Salman and Putin - Trump Thanks King Salman and Putin/10
On Sunday, US President Donald Trump described the OPEC Plus agreement as "great and will protect hundreds of thousands of American energy jobs", thanking the King Salman bin Abdulaziz and Russian President Vladimir Putin.