The price war began after Russia opted not to cut its petroleum production despite a sharp drop in demand caused by ongoing global lockdowns. In retaliation Saudi Arabia announced a number of price cuts, sending the global oil price spiralling by more than 40 per cent.
But OPEC has now agreed to production cuts of 9.7 million barrels per day, with OPEC secretary general HE Mohammad Sanusi Barkindo citing a “spirit of solidarity” and the importance of international co-operation in ensuring stable energy markets.
“We need to ensure as a group that we deliver on these expectations,” Mr Barkindo said.
“We need to iron out any marginal differences to reach a consensus decision. We need to get this deal over the line. The consequences of not finding a solution and unanimity today do not bear thinking about.”
Before the agreement was reached, the world was staring down the prospect of single-digit oil prices as Russia and Saudi Arabia refused to soften their stances. However, it remains unclear whether the production cuts will be enough to offset the impact of the coronavirus on global travel, with lockdowns set to continue for the foreseeable future.
OPEC will meet again on 10 June.
