I
ran’s Minister of Petroleum
Bijan Zangeneh said after
the videoconference meeting
of OPEC+ that Iran along
with Libya and Venezuela
would be exempt from any
output cut. US President Donald
Trump, who used to brand OPEC
as an ineffective cartel, offered
gratitude to OPEC+ countries for
their agreement that would save

hundreds of thousands of jobs in
the US. The market also reacted
positively to this agreement with
the price index growing 4% in the
global market.
Extraordinary Meeting
An unprecedented fall in crude
oil prices since March 2020 due
to the outbreak of the coronavirus
pushed the 13 OPEC member
states plus 10 allies to hold an
online meeting one day ahead of

the G20 summit. The objective
was to restructure the oil market
and oil prices, because the
market was in critical conditions
following the spread of Covid-19
and the failure of OPEC+ talks in
early March, lowering oil prices
down to $20 a barrel. In the
meantime, a price war between
Russia and Saudi Arabia worsened
the situation. They accused each
other of having triggered the price
war. Russia once demanded that

OPEC+ countries hold a meeting,
but Saudi Arabia opposed.
However, when the prices fell
below $23 a barrel, the US shale
industry was alerted. A group of
48 Republican Senators wrote a
letter to Saudi Arabia, warning
it of the consequences of their
price war. The ensuing contacts
between President Trump and
Russian President Vladimir Putin
convinced Saudi Arabia to agree
with the meeting. As soon as Saudi

Arabia called on OPEC+ to hold
an extraordinary meeting, the oil
prices grew to about $30.
Iran’s Zangeneh had warned
that in case 15 mb/d was not
cut during May, supply would
overtake demand and the market
would suffer a serious price shock.
However, restoring stability to the
oil market would not materialize
only by lower supply by OPEC+.
Covid-19 is a global crisis and all
nations are now struggling with it.

Efforts got under way to convince
the US, Canada, Norway and other
oil producers to join OPEC+ in
cutting oil production. Russia even
conditioned its own output cut
on reduction by US oil companies.
Zangeneh had also tweeted,
saying that other oil producers
including the US and Canada had
to contribute to the oil market
stability. Saudi Arabia and Russia
had raised their output following
the failure of the 178th OPEC
ministerial meeting. They buried
the hatchet and agreed to reduce
more than agreed level from their
output.
Historic Agreement
Under such conditions the
OPEC+ meeting was held through
videoconference on April 9 with
proposals for cutting 10-12 mb/d
from the oil supply. That was apart
from the proposed cuts by the
US, Canada, Norway and Brazil.
An agreement was reached on
10 mb/d reduction, but Mexico
whose oil exports stand at 1.753
mb/d disagreed. Seven hours of
talks with Mexico followed. Finally,
after 10 hours of intensive talks,
OPEC+ agreed to reduce 10 mb/d,
but the agreement was dependent
on Mexico’s cooperation.
After the meeting which
continued to early Friday by
Tehran time, Zangeneh said:
“For the first time in the OPEC
history, a two-year decision is
being adopted, which is historic

for output cut by OPEC and non-
OPEC.” The following days saw

continued talks with Mexico. Saudi
Arabia had said from the very
beginning that the agreement’s
viability was dependent on
Mexico’s cooperation. Mexico
still insisted that it would cut
only 100,000 b/d from its output.
Negotiations continued for
winning Mexico’s agreement.
The market was prudent and the
prices did not grow.
G20 Meeting
The oil and energy ministers