Oil hovers around $31 despite OPEC+ cut deal

The international oil benchmark, Brent crude, wobbled on Monday, despite the historic oil production cut deal sealed by the Organisation of Petroleum Exporting Countries and its allies on Sunday.

The OPEC, Russia and other countries agreed on Sunday to cut output by 9.7 million barrels per day in May and June, representing about 10 per cent of global supply.

The deal was expected to prop up prices but Brent crude rose, then fell and rose again on Monday. It was up by $0.47 to $31.95 per barrel as of 6.40 pm Nigerian time.

Saudi Arabia, OPEC’s de facto leader, on Monday set its May official selling prices for crude, selling oil to Asia more cheaply and keeping prices flat for Europe while raising them for the United States.

The US President, Donald Trump, made a case on Monday for doubling the oil supply cuts just approved by OPEC+ to 20 million bpd, saying the move would restore the energy sector faster.

He said on Twitter, “Having been involved in the negotiations, to put it mildly, the number that OPEC+ is looking to cut is 20 million barrels a day, not the 10 million that is generally being reported.

“If anything near this happens, and the world gets back to business from the Covid-19 disaster, the energy industry will be strong again, far faster than currently anticipated.”

His tweet did not appear to move oil markets, which were waiting for greater clarity on the deal reached on Sunday after Saudi Arabia, under pressure from the US, ended a four-day stalemate with Mexico that threatened to escalate a price war in the middle of the coronavirus crisis, according to S&P Global Platts.

Under the deal announced on Sunday, the 23-country OPEC+ alliance rein in 9.7 million bpd of crude oil production for May and June – down from 10 million bpd originally envisaged, as Mexico was allowed a more generous quota.

Outside of OPEC+, Canada has signalled a willingness to cut and Norway said it would decide about its cut “in the near future”.