SUCCUMBING TO THE pressure of US Pres. Donald Trump, the Organization of Petroleum Exporting Countries (OPEC), Russia and other oil-producing countries agreed on April 12 to cut production by 10% or 9.7 million barrels per day from May to June. This will be the highest oil production cut in history.
The reduction aims to arrest plunging oil prices in the global market due to the Covid-19 pandemic. Oil demand further dropped simultaneous with the suspension of operations of factories and enterprises across the globe. As a result, the average price of brent crude dropped to $20.09 per barrel, the lowest since 2002. Oil companies, especially those in the US incur huge profit losses, when the price of brent crude in the global market is lower than $30 per barrel.