US to cut oil production to ‘pick up slack’ for Mexico – Trump

The US will slash oil output by another 250,000 barrels a day to make up the difference for Mexico and help OPEC+ boost the price, in exchange for being compensated later, President Donald Trump has announced.

The Organization of Petroleum Exporting Countries (OPEC) had asked Mexico to lower its production by 400,000 barrels a day, but met with resistance from President Andres Manuel Lopez Obrador, who eventually agreed to a cut of only a quarter of that.

AMLO, as the Mexican president is known, said on Friday that Trump “generously” offered to lower the US output by another quarter million barrels a day, to make up the difference. The US president confirmed this at his own press briefing later in the day.

“The United States will help Mexico along and they'll reimburse us some time at a later date when they're prepared to do so,” Trump told reporters.

A price war launched by Saudi Arabia in early March overlapped with the Covid-19 pandemic to tank global markets, bringing oil down to the record low of $20 a barrel earlier this month. US shale producers have been the hardest hit.

Between the price collapse and the drop in demand due to coronavirus lockdowns, US oil producers have already drastically cut output by around 600,000 barrels a day, according to some estimates.

According to the terms of the OPEC+ agreement reported by multiple media outlets – but not confirmed officially yet – Saudi Arabia and Russia will both lower their output to 8.5 million barrels a day. Overall, the world’s producers pledged to further reduce production by eight million barrels a day from July till December, and by another six million for 16 months thereafter, AP reported.

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