Mexican President says they have a deal with OPEC+ and US to cut output

Forex

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

OPEC demanded Mexico cut 400K bpd but Lopez Obrador seems to indicate that OPEC+ has relented, perhaps because the US has pledged to cut.

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.

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