Oil investing types.
The United States is ready to help Mexico reach its production cut quota as part of the tentative OPEC+ deal, Mexico’s President Andres Manuel Lopez Obrador said on Friday, while the global pact to reduce production was in a kind of Mexican standoff early on Friday as Mexico was still balking at the large cuts it is asked to make.
Lopez Obrador spoke with U.S. President Donald Trump on Thursday and the United States agreed to cut 250,000 bpd for Mexico to help it reach the 400,000-bpd cut OPEC+ is asking of it, the Mexican president said at a news conference on Friday, noting that he had informed OPEC+ of this development.
OPEC delegates told Bloomberg, however, that they were not aware of details of a Trump-Lopez Obrador agreement about the U.S. helping Mexico to achieve the cuts.
On Thursday, during the OPEC+ video meeting, Mexico – part of the non-OPEC group of producers in the pact since 2017 – disagreed with proposals that it should reduce its production by 400,000 bpd from its October 2018 baseline.
Mexico walked out of the OPEC+ talks yesterday, and its Energy Secretary Rocío Nahle tweeted later that Mexico offered to OPEC to cut its production by 100,000 bpd for the next two months, as part of its contribution to support oil prices. Mexico was offering to cut its oil production from 1.781 million bpd in March to 1.681 million bpd, Nahle said.
Apparently, OPEC+ was not pleased with Mexico’s refusal to cut more and said in its official release about agreeing to 10 million bpd cuts that the deal “is conditional on the consent of Mexico.”
Even if the U.S. would really help Mexico reach the 400,000 bpd cut, it’s not clear yet how OPEC+ would see the total U.S. contribution to the deal during the G20 energy ministers’ meeting, ongoing at the time of this writing.
The U.S. has argued that its oil production decline is happening naturally as a result of the free market (and very low oil prices), but the heavyweights in the OPEC+ group, and most of all Russia, has signaled it would accept only voluntary production cuts as a contribution to the global deal.
Upstream oil investment.