Trump Says U.S. Agreed to Help Mexico With OPEC+ Cut Deal
“We are trying to get Mexico, as the expression goes, over the barrel,” Trump said in a White House news conference on Friday.
(Bloomberg) -- President Donald Trump, in a twist to talks to reduce global oil production, suggested output cuts American producers have only started making to weather a dramatic price crash could be counted toward Mexico’s share of the pact.
After Mexico’s Andres Manuel Lopez Obrador said the U.S. will help cover 250,000 to 300,000 barrels a day of production cuts his country is not able to make as part of a sweeping OPEC+ accord, Trump corroborated that by referring to cuts “which have already been made.” He acknowledged other nations may not support the arrangement.
“We are trying to get Mexico, as the expression goes, over the barrel,” Trump said in a White House news conference on Friday. He said Mexico had agreed to reduce its production by 100,000 barrels per day; the Organization of Petroleum Exporting Countries and Russia had sought a 400,000 cut from the country.
The deal, a Saudi Arabia-led attempt to rescue the oil industry from the overwhelming economic shock of the coronavirus crisis, was marked by setbacks after OPEC+ member Mexico balked and top producers outside the group followed the U.S. is limiting their contribution to naturally occurring cuts. The group had sought to get other countries to commit to at least 5 million barrels a day of reductions, while they’ll slash 10 million.
Trump spoke with Russian President Vladimir Putin on Friday for the second day in a row, after speaking with Mexico’s Andres Manuel Lopez Obrador on Thursday. The Mexican president said he had reached a deal with Trump for Mexico to sign onto OPEC+ production cuts. It’s unclear whether other nations have endorsed any Trump-AMLO deal.
“In speaking with the president, they have a limit; the OPEC nations have agreed to a different limit, a reduction of about 23%” Trump said. “So what I thought I would do -- I don’t know if it’s going to be acceptable, we’ll find out -- the United States will help Mexico along and they’ll reimburse us sometime at a later date when they’re prepared to do so.”
Trump later said that he had “agreed to pick up some of the slack” for Mexico, though he wasn’t sure whether such a plan would be acceptable to other oil producers. This would be done by “cutting some U.S. production,” which was already happening in any case since the U.S. is a “market-driven economy,” he told reporters.
Trump has said U.S. production would slow “automatically” in response to market conditions. U.S. Energy Secretary Dan Brouillette, in opening remarks at the G-20 meeting on Friday, said he predicted a decline of nearly 2 million barrels a day in U.S. output by the end of this year.
The shale boom has turned the U.S. into the largest oil producer. Last week, the country’s production fell by 600,000 barrels a day from a near-record 13 million.
©2020 Bloomberg L.P.