Still, Brent crude closed up 4 percent on Thursday at 31.48 $US a barrel when the deal took shape. Despite the magnitude of the agreed reductions, they are unlikely to offset the sharp decline in oil demand. Crude oil prices rose on Monday as the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed on Saturday to extend their current agreement on cutting crude production by a month. Sunday`s agreement was the result of more than a week of telephone conversations with Mr. Trump; Saudi Crown Prince Mohammed bin Salman; and President Vladimir V. Putin of Russia. Trump praised the deal and said on Twitter that it will “save hundreds of thousands of energy jobs in the United States.” On Thursday, the Opec producer organization and its allies tentatively agreed to cut production by about 10 percent from pre-crisis production. An additional 5 million barrels will be cut by other oil-exporting countries. OPEC members and their allies began talking last week in the hope that the United States, Canada and other Western producers would accept explicit cuts of up to four million or five million barrels per day. Instead, U.S. officials simply assured that crude oil production would be reduced over time, in addition to the voluntary reductions that have already begun at some U.S. companies.
The agreement announced sunday will amount to 7.7 million barrels per day from July to December and 5.8 million barrels per day from January 2021 to April 2022. It was not immediately clear whether the Trump administration has made a formal commitment to cut U.S. production, but in the face of falling prices, many companies in the country have already cut production. There is no international mechanism to strictly enforce these production agreements and fraud is common. Trump backed President Andrés Manuel Lepez Obrador by vaguely promising that he would balance the difference and helping the Saudis and Russians not abandon the interim agreement. But a final agreement depends on Mexico`s signature, after questioning the amount of production cuts it had requested, Reuters reported.