President Donald Trump on Friday confirmed the US had agreed to help Mexico meet its commitment to slashing oil production under a global deal to address the petroleum glut.
“Mexico is going to reduce by 100,000 barrels and that would mean that they’re 250 to 300 (thousand) barrels short. We’d make up the difference, they would reimburse us at a later date,” Trump said, adding that the proposal would involve cutting “some US production.”
Under the Organization of the Petroleum Exporting Countries deal, Mexico would have had to cut its output by 400,000 bpd.
But Mexico resisted, and wanted the reduction limited to 100,000.
Mexico is the lone holdout in the OPEC deal to cut crude production and shore up prices, and on Friday President Andres Manuel Lopez Obrador said the country had reached an agreement with Washington after Trump contacted him.
Oil prices have been wallowing near two-decade lows due to the coronavirus pandemic and a price war between key players Saudi Arabia and Russia.
The agreement would see output between May and June cut by 10 million bpd and another eight million from July to December, but it requires Mexico’s consent to take effect.
Lopez Obrador said Trump agreed to cut US production by an extra 250,000 bpd “as compensation” for Mexico.
At a press conference later in the day, Trump characterized Lopez Obrador as having “some political difficulty” with the OPEC deal.
“It’s a large amount for Mexico but it’s a very small amount for the United States being the biggest producer,” Trump said. “So I agreed to pick up some of the slack.”
Trump said Mexico’s reimbursement “could be in a different form,” though he didn’t know if the arrangement would be acceptable to Mexico and other oil producers.
