Opec+ reaches agreement to cut oil production by 10m barrels a day

Demand for oil has fallen by 30 per cent amid the coronavirus pandemic

Oil storage tanks operated by Transneft near Moscow, Russia. Market oversupply could add a further 1.3 billion barrels to global oil stocks, according to Opec. Bloomberg

Opec and other oil producers on Thursday agreed to cut output by 10 million barrels per day in May and June, to help shore up prices battered by the coronavirus crisis, said the group, known as Opec+.

It said the cuts would be eased between July and December to 8 million bpd and further relaxed to 6 million between January 2021 and April 2022.

Thursday's Opec+ talks will be followed by a call on Friday between energy ministers from the Group of 20 major economies, chaired by Saudi Arabia.

Talks were complicated by friction between Saudi Arabia and Russia, two of the world's biggest oil producers.

But sources on both sides said they had overcome differences amid the deepest oil market crisis in decades.

Global fuel demand has plunged by as much as 30 million bpd, or 30 per cent of global supplies, as steps to fight the coronavirus grounded planes, reduced vehicle use and curbed economic activity.

Benchmark Brent oil prices hit an 18-year low last month and were trading on Thursday about $32 a barrel, half the level at the end of 2019.

The US was invited to Thursday's Opec+ talks but it was not clear if it joined the video conference.

Washington has not committed to any cuts, although it said US output was falling gradually anyway because of plunging oil prices.

Russia responded that a natural decline was not the same as making cuts.

Friday's G20 talks could lead importing nations to announce plans buy oil for their strategic reserves to boost demand, said Fatih Birol, head of the International Energy Agency.

Independent global storage facilities have been filling up while supplies have flowed as demand dried up.