Global deal to cut oil output in sight after Mexico signs up

The OPEC oil cartel and nations, including Russia, have agreed to boost oil prices by cutting as much as 10 million barrels a day in production.

Even more countries, including the US, were discussing Friday their own cuts in what would be an unprecedented global pact to stabilise the market.

The agreement between OPEC and partner countries aims to cut 10 million barrels per day until July, then an 8 million barrels per day cut through the end of the year, and 6 million a day for 16 months beginning in 2021.

Mexico had initially blocked the deal but its president, Andres Manuel Lopez Obrador, said Friday that he had agreed with US President Donald Trump that the US will compensate what Mexico cannot add to the proposed cuts.

That paves the way for cuts that experts estimate could reach 15 million barrels a day in all - about 15% of world production. Such a move would be unprecedented both in its size and the number of participating countries, many of whom have long been bitter rivals in the energy industry.

The price of crude is down by over 50% since the start of the year and while that helps consumers and energy-hungry businesses, it is below the cost of production for many countries and companies.

That has strained the budgets of oil-producing nations, many of which are developing economies, and it has pushed private companies in the US toward bankruptcy.

Analysts warn even these proposed cuts may not be enough to offset the loss in demand over the longer term, as the coronavirus pandemic has decimated demand for energy around the world.

"COVID-19 is an unseen beast that seems to be impacting everything in its path," OPEC Secretary-General Mohammed Barkindo said at the start of the meeting, according to a statement.

"There is a grizzly shadow hanging over all of us. We do not want this shadow to envelope us. It will have a crushing and long-term impact on the entire industry."