Oil Price and OPEC+: Trump's #Saudi-Russia Cease-Fire Won't Last - Bloomberg

Oil Price and OPEC+: Trump's Saudi-Russia Cease-Fire Won't Last - Bloomberg:

After two days of high drama, low farce and long periods of tedium, the OPEC+ group of countries, led by Saudi Arabia and Russia, almost agreed to cut their oil production by an initial 10 million barrels a day in response to the coronavirus-triggered collapse in demand. That “almost” is important.

The drama was provided by Mexico refusing to accept its allotted cut. The farce followed when the country’s oil minister left the virtual OPEC+ meeting to hold separate talks with her U.S. and Canadian counterparts, while the other energy ministers agonized for hours over how to respond. The tedium? Well, that was just the bits in between.

Mexico was asked to cut 400,000 barrels a day of production in the first phase of an OPEC+ deal that would run for an unprecedented two years. It offered one-quarter of that, and from a slightly higher baseline than what was asked for.

An unlikely white knight appeared to ride to the group’s rescue on Friday in the form of U.S. President Donald Trump. He proposed an arrangement with Mexico’s President Andres Manuel Lopez Obrador (known as AMLO) in which 250,000 barrels a day of the “market-driven” decline in U.S. output would be rebranded as “Mexican.” But don’t be fooled: This won’t take a single additional barrel of oil off the market beyond those that would disappear anyway because of the Covid-19-prompted collapse in demand. That’s why this is still an “almost” deal, rather than a certain one: The Saudis and the Russians still have to decide whether they will swallow Mexico’s lack of genuine commitment.