According to the President of Mexico, Andres Manuel Lopez Obrador, President Donald Trump has agreed to cut oil production in the United States by an additional 250,000 barrels per day.
This cut is a ‘generous’ gesture by the United States’ President to allow Mexico to contribute more to global oil production.
During the OPEC+ talks that held on Thursday, the 9th of April, Russia, Saudi Arabia, and all the members of the union agreed to cut their production by 10 million barrels per day. Mexico, on the other hand, had bulked at the proposition.
President Lopez Obrador revealed in a news conference that Mexico had been pressed to make oil cuts of 400,000 barrels per day. It was only after some negotiation that the group lowered the cuts to 350,000 barrels per day.
Lopez Obrador revealed that he spoke with President Donald Trump before he made the declaration that the country’s outputs would only be reduced by 100,000 barrels per day. Trump’s generous cut will compensate the remaining 250,000 barrels per day.
The President of Mexico has plans to keep maintain an increase in the production of its oil. In his administration, the oil wells in the country doubled to a staggering 423.
President Lopez Obrador further went on to reveal that he did not initiate the conversation. Trump had, in fact, gotten in touch with him to discuss the intended cuts. He expressed that he was somewhat surprised by Trump’s decision to help the country correct the surplus.
Texas-based oil analyst and Publisher of Mexico Energy Intelligence, George Baker, commented that Trump had very little to lose by offering the oil production cuts. He postulated that President Trump might have calculated that crude output would decline in the near term even after the pandemic passes.
Also, cuts that stabilize prices will help to provide some relief for United States shale workers who would have otherwise been at risk if prices were unstable.
Baker went on to say that President Trump helping Lopez Obrador would make it easier for the United States President to apply some pressure on Mexico later in the future in border-crossing issues.
As President Lopez Obrador has made increasing his oil outputs a priority, President Trump has also made the border-crossing a key priority of his administration. He will continue to put the necessary measures in place to ensure that the surge of migrants into the United States is curtailed.
Try as we might, we can only guess at President Trump’s intentions. On another day, the decision of the United States to reduce cut oil production to boost prices would have violated antitrust laws. However, in this case, there is a rather solid basis for the act, and this basis lies within legal bounds.
The bottom line is, a balance has been established, and President Lopez Obrador of Mexico is indeed thankful to the United States President for his generosity.