President Trump said Friday that Mexico will cut its oil production 100,000 barrels per day as part of a global deal to limit output to stem an oil price crash that has harmed the U.S. shale industry.
Saudi Arabia and Russia, along with other countries in an OPEC-led alliance, reached an agreement in principle Thursday to cut oil production by 10 million barrels per day beginning in May, which would be the largest market intervention in history. But Mexico refused to back the deal, which prevented it from being finalized.
Trump said he spoke with Mexican President Andres Manuel Lopez Obrador, who told Trump that Mexico will cut its production by 100,000 barrels per day.
“We are trying to get Mexico, as the expression goes, over the barrel,” Trump said during his daily coronavirus task force briefing.
Trump also spoke with Russian President Vladimir Putin and Saudi King Salman in a whirlwind bid of diplomacy to try to get the oil production cut deal to stick.
Trump said the United States would “help” Mexico in exchange for the country reducing its oil production. He said the U.S. would be “cutting some production” of its own. Mexico had originally balked at OPEC wanting it to cut production 400,000 barrels per day, so Trump suggested the U.S. would make up some of the difference between that number and Mexico’s commitment to him to cut 100,000 barrels per day.
“I agreed to pick up some of the slack, and they would make up what we are doing at a later date,” Trump said.
He said Mexico would “reimburse us at a later date.”
But Trump added that “U.S. production has already been cut” naturally as private companies are pulling back because prices are so low, and producers are running out of space to store unused oil.
The U.S. is unlikely to contribute formally to the agreement to cut oil production because its free market system does not allow for federal intervention.
U.S. Energy Secretary Dan Brouillette said Friday he expected U.S. oil production to fall nearly 2 million barrels per day by the end of 2020, while “some models show even more dramatic figures, up to 3 million barrels per day.”
The agreement between the U.S. and Mexico would have to be accepted by OPEC and its allies, which hasn’t happened yet.
“I don’t know if it will be acceptable to other oil-producing nations,” Trump said.
