OPEC and Russia meet Thursday to attempt to agree to record oil production cuts; however, their efforts to deal with the slump in prices wrought through the coronavirus pandemic have been complicated by mutual animosity and the reluctance of the U.S. to join the action.
Global fuel demand has tanked up to 30% as lockdowns have grounded aircraft, reduced car usage and curbed economic activity. Crude prices have slumped below the cost of production for a lot of producers, including the booming U.S. shale oil sector.
U.S. President Trump stated last week a settlement he had brokered with OPEC leader Saudi Arabia and Russia could result in cuts of as much as 10-15 million barrels per day or 10-15% of global supplies, an unprecedented reduction.
Riyadh and Moscow, who fell out when a previous agreement on curbing supplies collapsed in March, have signaled their settlement to deep cuts would depend on the U.S. and others outside a gaggle known as OPEC+ joined in.
Trump leads the world’s most significant producer, but his administration has shown no appetite to mandate cuts in domestic supply. The U.S. Division of Energy echoed those remarks this week, saying the nation’s oil production was already falling without government action.
Saudi Arabia and Russia have yet to publicly sign any settlement on reductions or how such a deep cut could be distributed among OPEC+.