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A Kuwaiti trader checks stock prices at Boursa Kuwait. Photo: Yasser Al-Zayyat/AFP via Getty Images

Oil prices haven’t changed all that much in response to the announcement Sunday of an international agreement on historically steep oil production cuts.

Where it stands: The global benchmark Brent crude is trading in the $31-per-barrel range, not far from where it ended last week, and the U.S. benchmark WTI at around $23.

Why it matters: The market's reaction to the OPEC+ agreement suggests a couple of things...

  • One is that while the deal will help prevent the bottom from completely dropping out, it's nonetheless not enough to compensate for the near-term collapse in demand. Various analysts see a near-term hit in the 25 million-35 million barrel-per-day range.
  • Another is that much of the effects have already been priced into the market. Oil surged early this month when President Trump said Russia and Saudi Arabia were in talks about a big cut after their supply management pact collapsed in early March.
  • Also, the agreement is quite similar to the tentative plan that emerged Thursday.

Catch up fast: The OPEC+ group led by Saudi Arabia and Russia reached a final deal to jointly cut production by 9.7 million barrels per day in May and June, which would represent about 10% of global demand before COVID-19.

The size of the cuts then decline in stages through April of 2022 (though things will be reassessed along the way).

The big picture: It's part of wider — and looser — commitments that add several million more barrels per day to the total figure, perhaps bringing the theoretical total to the 15 million range or even higher, though there's no precise tally.

  • Producers outside the group, notably the U.S., met virtually under the G20 umbrella Friday and are touting production cuts.
  • President Trump was personally involved in the negotiations, but U.S. officials have not offered firm commitments. Instead, the Energy Department emphasized in recent days that low prices and collapsing demand are forecast to reduce U.S. production by roughly 2 million-3 million barrels per day by year's end due to market forces.
  • Saudi Arabia, the UAE and Kuwait may voluntarily cut more deeply than their formal quotas, adding another roughly 2 million barrels per day combined, per reports in S&P Global Platts, International Oil Daily and elsewhere.

Threat level: The oil sector still remains in deep distress. Bloomberg notes that the deal "won't save the weakest" among shale producers, and Axios' Dion Rabouin points out that more bankruptcies and defaults await, something we also looked at here.

Go deeper

Collins helps contractor before pro-Susan PAC gets donation

Sen. Susan Collins during her reelection campaign. Photo: Scott Eisen/Getty Images

A PAC backing Sen. Susan Collins in her high-stakes reelection campaign received $150,000 from an entity linked to the wife of a defense contractor whose firm Collins helped land a federal contract, new public records show.

Why it matters: The executive, Martin Kao of Honolulu, leaned heavily on his political connections to boost his business, federal prosecutors say in an ongoing criminal case against him. The donation linked to Kao was veiled until last week.

How cutting GOP corporate cash could backfire

Illustration: Aïda Amer/Axios

Companies pulling back on political donations, particularly to members of Congress who voted against certifying President Biden's election win, could inadvertently push Republicans to embrace their party's rightward fringe.

Why it matters: Scores of corporate PACs have paused, scaled back or entirely abandoned their political giving programs. While designed to distance those companies from events that coincided with this month's deadly siege on the U.S. Capitol, research suggests the moves could actually empower the far-right.

6 hours ago - Politics & Policy

Scoop: Kaine, Collins pitch Senate colleagues on censuring Trump

Sen. Tim Kaine speaks with Sen. Susan Collins. Photo: Andrew Harnik/AP via Getty Images

Sens. Tim Kaine and Susan Collins are privately pitching their colleagues on a bipartisan resolution censuring former President Trump, three sources familiar with the discussions tell Axios.

Why it matters: Senators are looking for a way to condemn Trump on the record as it becomes increasingly unlikely Democrats will obtain the 17 Republican votes needed to gain a conviction in his second impeachment.