The latest news about the effectiveness of coronavirus vaccines, which have pushed oil prices to their highest level since their fall in April, may have made it more difficult to reach an agreement. In response to these higher prices, some oil producers saw less need to maintain supply and wanted to increase pumps to try to improve nearly a year with gloomy oil yields. Sunday`s agreement follows a busy week for oil ministers. On Friday, the Group of 20 held a separate virtual meeting to discuss the state of global oil markets, sparking speculation that further production cuts might be possible. (The G20 includes producers such as Canada and the United States who are not participating in OPEC reductions) However, the meeting ended without any new commitments announced publicly. Iraq, which had one of the worst compliance rates in May, agreed to further cuts, although it was unclear how Baghdad would reach an agreement with oil companies to curb Iraqi production. [OPEP/O] Iran`s oil ministry confirmed the overall reduction of $9.7 million for May and June and said the deal would lead Mexico to cut production by just 100,000 barrels for the two months. This was a sensitive point for the agreement to boost world energy prices. But there were no smiles and laughter for weeks after the OPEC group said OPEC members and other nations failed to reach an agreement on production cuts in March, causing prices to falter.
Days earlier, Saudi Arabia sharply criticized Russia for comments it called criticism from the kingdom, which is trying to appease U.S. President Donald Trump, a longtime critic of OPEC. The cartel and other nations have agreed to allow Mexico to cut only 100,000 barrels per month, a sensitive point for an agreement originally reached Friday after a marathon video conference between 23 nations. They reached the agreement just hours before Asian markets reopened on Monday, when the international benchmark brent index was trading at just over $31 a barrel and U.S. shale producers were struggling. Under the agreement, members of the Organization of Petroleum Exporting Countries, along with Russia and other countries, will increase production by 500,000 barrels per day in January and possibly a similar amount in the following months. The increase, less than 1% of the global oil market, comes at a time when demand is still under pressure from the coronavirus pandemic. Saudi Arabia and Russia agreed on Sunday with other oil-producing nations to cut production by 9.7 million barrels per day for the next two months to stem a drop in oil prices caused by the coronavirus pandemic and the feud between Moscow and Riyadh. It was surprisingly difficult to reach an agreement. Thursday`s meeting was delayed by two days as officials struggled for consensus. OPEC and other Russian-led oil nations, trying to measure the strength of the global economy as coronavirus continues to rage but with vaccines on the horizon, reached a compromise on Thursday to moderately increase production in January.