OPEC+ Finalizes a Historic Agreement to Reduce Oil Supply

Members of OPEC have agreed to partner with several non-member nations on a coordinated effort to stabilize the oil market. Overall, 23 countries -- dubbed OPEC+ -- will slash supplies by 9.7 million barrels per day (BPD) starting in May, according to a report by The Wall Street Journal. That's roughly equivalent to 10% of the global oil production. 

Saudi Arabia and Russia will reportedly shoulder the bulk of the supply curtailment, reducing their output by 6 million BPD. Meanwhile, other producers, including the U.S., will contribute a combined 3.7 million BPD of additional cuts. The U.S. agreed to reduce its production by 300,000 BPD to help cover for Mexico, which wasn't willing to meet OPEC's request of a 400,000 BPD reduction. Instead, Mexico will cut production by 100,000 BPD. The U.S. output reduction will mainly come via market-driven losses as producers in the country are shutting-in wells due to poor economics and lack of storage capacity. Continental Resources (NYSE: CLR), for example, slashed its output by 30% because of low demand. 

Image source: Getty Images.

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Source Fool.com