Saudi Arabia led OPEC and Russia has decided to slash output and bring an end to the oil price war, which started last month, the media reported.
OPEC and its allies decided to slash oil output by about 10 million barrels a day in May and June.
Representatives of each country met through a video conference and make the decision, which was called for by US President Donald Trump. Due to the oil price war, the US shale companies were severely hit.
Reportedly, Saudi Arabia and Russia, the biggest producers in the group, will each take output down to about 8.5 million a day, with all members agreeing to cut supply by 23 percent.
However, according to recent media reports, Mexico is yet to agree to the deal. Mexico’s Energy Secretary Rocio Nahle Garcia later tweeted that Mexico is not willing to accept the suggested output cut, however, she said Mexico is ready to reduce production by 100,000 barrels a day.
Last month, both parties held a meeting in Vienna, Austria. However, negotiations to cut production in light of the coronavirus outbreak collapsed. This resulted in Saudi Arabia increasing supply to the market and reducing crude oil prices by 10 percent. The UAE too soon followed suit.
This resulted in an oil price war and global crude prices dropping as much as 30 percent, the biggest drop in the last two decades.
During the period between 2014 and 2016, oil producers including Saudi Arabia and Russia engaged in a market share war to squeeze out shale production from the US by reducing prices and offering more supplies to Asia.
The market share war, however, ended in 2016 when Russia and Saudi Arabia called a truce and decided to cut production.