The Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC allies led by Russia - the so-called OPEC+ - have agreed to cut their overall crude oil production by 9.7 mb/d over the 1 May 2020 - 30 June 2020 period, in an attempt to reduce the global oversupply and to firm up depressed oil prices. The production cuts would be calculated on the basis of the October 2018 production level, except for Saudi Arabia and Russia that have a baseline level of 11 mb/d. Production cuts would then be relaxed to 7.7 mb/d from 1 July 2020 to 31 December 2020 and to 5.8 mb/d from 1 January 2021 to 30 April 2022. The potential extension of the agreement beyond April 2022 will be reviewed in December 2021.
The OPEC+ initially proposed cutting their overall crude production by 10 mb/d. Under the terms of the initial agreement, all members would reduce their production by 23%, with Saudi Arabia and Russia both cutting their output by 2.5 mb/d and Iraq cutting more than 1 mb/d. The agreement was conditional on the consent of Mexico, which rejected the agreement due to the significant production cut (400,000 bbl/d) and rejected the agreement; Mexico succeeded to lower the production cuts to 100,000 bbl/d and finally joined the market stabilisation efforts. So far, the United States has not announced any reduction in its own crude oil production, but smaller non-member producers such as Canada and Norway have expressed willingness to take part in the global production cut.
In March 2020, the OPEC+ had failed to agree on a 1.5 mb/d cut in crude oil production (including 1 mb/d for OPEC members and 0.5 mb/d for non-OPEC producers), that would have extended the existing agreement on production cuts of 2.1 mb/d expiring on 31 March 2020. Russia rejected a further production cut, considering that it would benefit to large producers not subject to such agreements, such as the United States. In the lack of an agreement, Saudi Arabia announced that if would raise its oil production to 12.3 mb/d over the coming months and to boost its production capacity from 12 mb/d to 13 mb/d. These decisions contributed to a collapse in crude oil prices, which were already falling due to the coronavirus outbreak that slashed global oil demand.