The energy minister of Saudi Arabia said that he is ready to cut oil production even further if necessary.
"When we need, thanks to flexibility and pragmatism, we can do more than we should have done," Prince Abdulaziz bin Salman said. "We must control supply and demand depending on the development of events." he added.
On Sunday, OPEC countries signed an agreement to jointly reduce oil production by about 9.7 million bbl per day.
"We remain confronted with the uncertainty associated with the coronavirus and its effects," Prince Abdulaziz said.
According to the prince, Saudi Arabia agrees to the reduction as long as other members of OPEC+ also cut production within the framework of the agreement. In this regard, the prince is optimistic about the markets.
"This is a typical deal: buy rumors, sell news," said the prince.
President Donald Trump also commented: "Finally, on Sunday, a major historic oil contract was completed that would save hundreds of thousands of jobs in America." However, the agreement would probably lead to layoffs and bankruptcy in the shale industry.
Meanwhile, according to the Federal Reserve Bank of Kansas City, if oil prices remain at around $ 30 per barrel, almost 40% of oil and natural gas producers will face insolvency during the year.
Whiting Petroleum Corp. and Hornbeck Offshore Services Inc has already filed for bankruptcy last week.
Analysts from Goldman Sachs called the OPEC+ agreement as "too small" and "too belated". They said that since storage depots are full in the coming weeks, a further drop in oil prices is expected. In March, oil prices in some areas of US have already fallen below $ 10 per barrel.
Many refineries, due to oversupply and low demand, are reducing oil production and abandoning crude oil, which puts pressure on small producers.
"The problem in shale is the same problem that every producer has: low-cost producers win against high-cost producers. However, everyone is losing now," Kevin Book, managing director of ClearView Energy Partner, said. "So what does it mean when everyone loses and you lose less? Some US manufacturers will survive the storm better than others, so I don't think you can draw a slate with one brush," he added.
Meanwhile, Mexico President Andres Manuel Lopez Obrador convinced OPEC + members to allow him to reduce production much less than them, boosting his nationalist project to revive 'Pemex'. Thus, Mexico will reduce 100,000 barrels - only a quarter of its proportional share of 9.7 million barrels per day.
