Russia and Saudi Arabia have called off their brutal price war and are now pushing dozens of major crude producers toward a deal that would slash production and help stabilize a market that's been rocked by the coronavirus pandemic.
A marathon video conference between OPEC members and other major energy powers on Thursday ended with a tentative deal to reduce production by 10 million barrels per day in May and June, the deepest cut ever agreed by the world's oil producers.
Even if the deal is finalized, the decline in production would amount to only about 10% of the world's normal supply of oil, far below the estimates for how much demand for oil has collapsed in the wake of the coronavirus crisis. And it is unlikely to stem the massive plunge in oil prices in recent months.
"For the oil market, [the coronavirus] has completely up-ended market supply and demand fundamentals since we last met on March 6," he said, according to a transcript of the remarks."Our industry is hemorrhaging; no one has been able to stem the bleeding." Even those dire forecasts may be too optimistic, as they could underestimate how much demand has fallen with harsh restrictions on travel, work and public life now in place in much of the world because of the pandemic.
Iran, Libya and Venezuela would be exempted from the output cuts due to sanctions or lost production.
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