A meeting of energy ministers of the G20 group of major economies ended today without broadening the scope of a two-year oil production cut plan tentatively agreed by Opec and its partners a day earlier.
The G20 instead plans to form a task force to help Opec and non-Opec members — collectively known as Opec+ — track oil production declines and market-balancing moves by countries that are not formally committed to reducing output.
The formation of a "short-term focus group" is the only concrete accomplishment of an energy ministerial that Opec members and their allies committing to production cuts hoped to use to obtain assurances of similar measures by other producers.
The monitoring task force will be open to participation by all G20 members on a voluntary basis and will report its assessments to energy ministries while Saudi Arabia chairs the G20 group this year. An Opec+ delegate outside of the G20 said that the task force could function like the Joint Market Monitoring Mechanism that monitored compliance with the Opec+ production cut agreement in 2016-2020.
But oil producers outside the Opec+ alliance rejected taking part in coordinated production cuts at the G20 meeting. They, instead, assured Opec+ that the anticipated decline in their production, plans to soak up excess supply in the strategic petroleum reserves (SPR) and measures to boost oil demand through economic stimulus would help stabilize the markets.
"We recognize the commitment of some producers to stabilize energy markets," the energy ministers' joint communique said. "We acknowledge the importance of international cooperation in ensuring the resilience of energy systems."
Russian energy minister Alexander Novak said at the conclusion of the G20 ministerial that the Opec+ group expects the other major producers to implement 5mn b/d in production cuts by May-June, to complement the Opec+ tentative deal to cut output by 10mn b/d for two months from 1 May .
But Canadian natural resources minister Seamus O'Regan pushed back on Novak's comments, saying that "no numbers were discussed" at the G20 meeting.
Neither the US nor Canada offered any pledges to lower production, in part because their national governments lack clear legal authority to order such cuts. The two countries instead tout projected production declines as a result of cuts to drilling budgets by private companies and likely production shut-ins as fuel demand falls.
The tentative deal agreed by Opec+ members on 9 April has yet to be finalized, with Mexico balking at the group's expectation of a 400,000 b/d cut in the country's output.
US president Donald Trump unexpectedly offered to back a proposal by his Mexican counterpart, Andres Manuel Lopez Obrador, that the US help Mexico make up the balance of the reduction that the Opec+ group asked the country to make. Mexico under Lopez Obrador's proposal would pledge to cut 100,000 b/d only, with the rest to come from the US. The US will cut 250,000 b/d to help close the Opec+ deal, Trump says, "which is what we already have done" — an apparent variation of his administration's argument on organic production declines.
Mexico will "hold firm" on its offer, energy minister Rocio Nahle said at the conclusion of the G20 meeting.
