Context: Recently, at G20 talks, top oil nations pushed to finalise a deal on oil cuts to lift prices slashed by the coronavirus crisis.
Key Points

• Measures to curb the spread of the coronavirus have destroyed demand for fuel and driven down oil prices.
• It strained the budgets of oil producers and also affected the U.S. shale industry which is more vulnerable to low prices due to its higher costs.
• Saudi Arabia and Russia and its allies (OPEC + group), had forged a pact to curb crude production by the equivalent of 10% of global supplies.
• They also want other producers including the United States and Canada to cut a further 5%.
• The crisis in the oil market has pushed Russia and Saudi Arabia to patch up differences after their hostile meeting in March, 2020.
• The dispute over how best to tackle falling prices led them to scrap their existing pact on production restraint that had helped balance the oil market for three years.
• Russia and Saudi Arabia agreed that their cuts would both be calculated from an October 2018 baseline.
• But efforts to conclude the deal hit the buffers when Mexico said it would only cut output by a quarter of the amount demanded by OPEC +.
• Mexico also said that the US had offered to make extra U.S. cuts on Mexico’s behalf.
• Mexico also cares less about low oil prices because of its hedging programme, which protects it against price falls.
• The demand for oil has plunged by 30% and even an unprecedented cut of 15% made by the deal in global supplies would have little effect on prices.
• The head of the International Energy Agency said importing countries could offer some support to the market by making extra purchases of crude for strategic reserves.
• The United States has said that it would help demand by opening its strategic reserve to store as much oil as possible.

About Organization of the Petroleum Exporting Countries (OPEC)

• The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
• It aims to manage the supply of oil in an effort to set the price of oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
• It is headquartered in Vienna, Austria.
• OPEC membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.
• As of April 2020, OPEC has a total of 13 Member Countries viz. Iran, Iraq, Kuwait, United Arab Emirates (UAE), Saudi Arabia, Algeria, Libya, Nigeria, Gabon, Equatorial Guinea, Republic of Congo, Angola, and Venezuela are members of OPEC.

About OPEC +

• The non-OPEC countries which export crude oil are termed as OPEC + countries.
• It is also referred to as the Vienna group.
• It is grouping of oil producing nations, made up of the OPEC members and 10 other non-OPEC members (include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan).