Mexican President says they have a deal with OPEC+ and US to cut output
Comments from Lopez-Obrador:
- We argued that it's very hard to cut output
- Mexico has struggled to increase its production
- Mexico will contribute to stabilize prices
- Mexico agreed to cut 100K bpd
- Says US will cut additional 250K bpd
- Mexico has already informed oil producers of agreement
- Target will be 1.686mbpd
- Says "it's a done deal"
OPEC demanded Mexico cut 400K bpd but Lopez Obrador seems to indicate that OPEC+ has relented, perhaps because the US has pledged to cut. I won't believe it until we hear from OPEC.
It's not clear how the US is going to mandate some kind of a cut or if the US will argue that market-driven shut-ins are the same thing. Previously, there has been talk about curtailments in Texas and some kind of COVID-19 health mandate to close some gulf production.
Mexico has one of the stronger hands here because they have hedge all 2020 production. Amlo is indicating that than is for Mexico to eventually process all its oil domestically. My guess here is that Mexico is basically angling to create a closed oil industry and saying that if its internal production meets its own demand, then how much they produce is no one's business.
Update: Norway now says it may join cuts alongside others.