U.S. President Donald Trump on Friday confirmed that the United States would "help Mexico along" in achieving the production requests that OPEC+ has asked it to make.
"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 said at a White House press briefing on Friday afternoon, without elaborating on the extend of the "help."
OPEC+ has requested that Mexico cut 400,000 bpd, but Mexico, who is hedged to the nines, is not eager to bite off such an ambitious figure. Instead, Mexico has agreed to cut 100,000 bpd, which is unlikely to satiate OPEC+.
Not wanting the deal to fail-in fact, needing it to succeed-Trump agreed to help Mexico. According to Mexico's President Obrador, Trump agreed to have the United States cut 250,000 bpd of its production on Mexico's behalf to make up for its production cut shortfall. Trump did not cite this figure during the briefing and stressed that he did not know if OPEC would be okay with the deal AMLO and Trump cooked up.
It is unclear exactly how the United States would cut 250,000 bpd in such a free-market system that does not give the President the powers to mandate specific production levels. Trump has, however, on previous occasions indicated that this free market system will naturally drive U.S. producers to reduce run rates as storage nears capacity and oil prices fall.
President Vladimir Putin had previously dismissed the idea of a natural production cut as a result of the market.
The G20 group that is meeting today was set to discuss the production agreement from OPEC+. OPEC+ was hoping to pick up another 5 million bpd of cuts from G20 members today, in addition to the already 10 million bpd of cuts that OPEC+ agreed to.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More