OPEC And Its Allies Agree To Massive Cut In Oil Production Marathon video chats led to a record-setting 9.7 million barrels per day in cuts. But analysts say that's not a big enough drop to balance oil markets, given the total collapse in demand for crude.
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As Demand For Oil Dries Up, OPEC And Allies Agree To Historic Cuts In Output

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As Demand For Oil Dries Up, OPEC And Allies Agree To Historic Cuts In Output

As Demand For Oil Dries Up, OPEC And Allies Agree To Historic Cuts In Output

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  • <iframe src="https://www.npr.org/player/embed/831261657/833010504" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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STEVE INSKEEP, HOST:

A bit of news over the weekend - many of the world's oil producers have agreed to cut production to prop up prices. NPR's Camila Domonoske reports on their deal.

CAMILA DOMONOSKE, BYLINE: The average price of a gallon of gasoline in the United States is well under $2. But many people aren't filling up because they're not going anywhere. That's the state of the oil market in a nutshell. Oil is super cheap, and there's not much global demand. What's that done to oil producers? Here's Mohammed Barkindo, the secretary general of OPEC on Thursday.

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MOHAMMED BARKINDO: Our industry, Mr. Chairman, is hemorrhaging. No one has been able to stem the bleeding.

DOMONOSKE: In fact, instead of stopping the bleeding, Saudi Arabia and Russia were adding to it by waging a price war against each other. But now they've called a truce, and OPEC is trying to put a bandage on those wounds. Actually, it's OPEC Plus. The oil cartel has expanded from its core members to include allies like Russia and Mexico. And when Mexico threatened to derail this deal, President Trump stepped in.

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PRESIDENT DONALD TRUMP: We are trying to get Mexico, as the expression goes, over the barrel.

DOMONOSKE: The U.S. is the world's largest oil producer, and American oil and gas companies have been hit hard by low prices. President Trump is often hostile towards OPEC, but this time, he helped them out. The new deal is massive - nearly 10 million barrels of oil per day in cuts. That's the biggest deal in OPEC history. But the drop in demand - more than twice that amount. Roger Diwan is an oil strategist at IHS Markit.

ROGER DIWAN: But there's no cut that can match that degree of shrinkage in the market. It's not possible.

DOMONOSKE: So despite the new deal, oil prices are still low. In fact, Diwan says this deal isn't about propping prices up. It's about avoiding the collapse of the oil industry. Camila Domonoske, NPR News.

(SOUNDBITE OF GUILTY GHOSTS' "INDIGO OF THE KINGS")

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