The biggest supply cut ever contemplated by the world's top oil producers is hanging in the balance as a refusal by Mexico's leftist leader to ...
FILE PHOTO: Mexico's President Andres Manuel Lopez Obrador holds a news conference at the National Palace in Mexico City, Mexico April 10, 2020. Mexico's Presidency/Handout via REUTERSMEXICO CITY/DUBAI: The biggest supply cut ever contemplated by the world's top oil producers is hanging in the balance as a refusal by Mexico's leftist leader to imperil his plans to rebuild state oil company Pemex has angered the Saudi prince who helped craft the deal.
In a compromise hammered out with U.S. President Donald Trump, Lopez Obrador said on Friday the United States had offered to cut an additional 250,000 bpd on Mexico's behalf, bringing them close to the target.However, Saudi Arabia - the heavyweight of global oil diplomacy - has balked at that and dug in its heels, despite some other producers from the group of OPEC nations and their allies - known as OPEC+ - calling for the cuts to go ahead regardless.
"If OPEC+ accepted this and everybody who doesn't like the numbers can just withdraw or leave, then we are in for a really bad time," said one OPEC source. At the heart of the debate has been the reference production level used by Mexico, which for this year has hedged its oil output at US$49 per barrel, well above current prices, said one source. It will lose revenues if forced to make cuts.
Other top oil producers have signaled the U.S.-Mexico arrangement is no hindrance to getting a deal, with the United Arab Emirates and Algeria saying on Saturday a workable deal had been reached.
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