Ryad (AFP)

An agreement on a massive drop in oil production was close at hand Friday after a crucial meeting of the exporting countries, Saudi Arabia and Russia at the head, while Ryad hosts a meeting of the G20 Energy Ministers during the day.

A statement from the Organization of Petroleum Producers (OPEC), published after eleven hours of discussions by videoconference, said Friday morning of a prior agreement on a reduction in world supply of 10 million barrels of crude per day (mbj) in May and June, during these negotiations conducted under the aegis of OPEC and Russia, not a member of the cartel.

However, there remains an obstacle: a non-cartel country, Mexico, has not given its approval. However, it is essential to ratify a decision commensurate with the crisis that is hitting the sector in these times of the global coronavirus pandemic.

Saudi Arabia is to hold a separate virtual meeting of G20 energy ministers at midday on Friday. Ryad hopes to expand the crude oil production reduction agreement to non-OPEC members, including the United States and Mexico.

Due to the confinement of half the world's population to limit the Covid-19 pandemic, the sharp slowdown in transport and the decline in industrial production, demand for oil is in free fall, even as world supply was already in surplus.

On the markets, there was fear of friction between Ryad, leader of OPEC, and Moscow: it was ultimately Mexico that obstructed, finding excessive the effort of 400,000 barrels per day that was demanded of it, compared to other countries, according to the Bloomberg financial news agency.

The withdrawal of ten million barrels per day in May and June, then from 8 million from July to December, would be mainly supported by Saudi Arabia and Russia, but at least twenty other countries should participate in the effort, according to the same source.

Mexican energy minister Rocio Nahle Garcia said on Twitter that his country had proposed a drop of 100,000 barrels.

"They are close to an agreement, we will soon know what it is," wanted to reassure Donald Trump during a press briefing Thursday in Washington, after an exchange with his Russian counterpart Vladimir Putin and King Salman d 'Saudi Arabia.

"They will probably announce something today [Thursday] or tomorrow" Friday, said the American president.

- Expanded circle -

While still hovering around $ 60 a few months ago, oil prices reached levels seen at the start of last week since 2002. The price of oil per OPEC basket is just above of 21 dollars.

The 13 OPEC countries and their 10 partner countries, with which they form the OPEC + alliance, are therefore trying to react.

To organize this extraordinary meeting, Saudi Arabia and Russia resumed the dialogue and put an end to the price and market war that they had started after their last conference, on March 6 in Vienna. Moscow, the world's second largest producer, then slammed the door of OPEC +. And Ryad, the leading exporter, had opened the valves and sold its oil to Europe.

But the two countries were then surprised by the rapid spread of the virus, which penalized demand at a time when the global supply of crude was in surplus.

Even if agreed, several analysts say they doubt the ability of producers to support prices.

"A reduction of 10 million barrels a day in May and June will prevent reaching storage limits and will prevent prices from falling into an abyss, but it will still not restore the desired market balance", according to Rystad Energy analysts.

Desirous of forging the widest possible coalition, OPEC + had for the first time invited oil-producing countries outside its alliance. Russian Minister of Energy Alexandre Novak welcomed the presence of nine additional countries on Thursday, including Canada and Norway.

The United States, although invited, cannot participate directly in these discussions because of its strict "antitrust" regulations prohibiting this type of agreement. The country, which is also not a member of the Opep + alliance, wants a reduction in supply to stabilize prices and give fresh air to their shale oil industry, in great difficulty.

A new OPEC meeting is scheduled for June 10, "to decide on additional measures, as much as is necessary to balance the market".

© 2020 AFP