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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

Updated 2 hours ago - World

U.S. airstrike kills senior al-Qaeda leader in Syria, DOD says

A displacement camp near the village of Qah in Syria's northwestern Idlib province. Photo: Ahmad Al-Atrash/AFP via Getty Images

A U.S. airstrike in northwest Syria on Friday killed senior al-Qaeda leader Abdul Hamid al-Matar, U.S. Central Command said in a statement.

Why it matters: Syria serves as a "safe haven" for the extremist group to plan external operations, according to U.S. Army Maj. John Rigsbee.

Updated 7 hours ago - Politics & Policy

Giuliani associate Lev Parnas convicted of campaign finance crimes

Lev Parnas, a former associate of then-President Donald Trump’s personal lawyer Rudy Giuliani. Photo: Stefani Reynolds/Bloomberg via Getty Images

Florida businessman Lev Parnas was convicted Friday on charges of conspiracy to make foreign contributions to political campaigns, according to multiple outlets.

Why it matters: Prosecutors said Parnas, then an associate of former President Donald Trump's personal lawyer Rudy Giuliani, funneled over $150,000 from a Russian businessman into U.S. campaigns as part of an effort to land licenses in the U.S.'s legal cannabis industry.

Supreme Court agrees to hear challenges to Texas abortion law

Photo: Saul Loeb/AFP via Getty Images

The Supreme Court on Friday agreed to hear two cases challenging Texas' abortion law, which bans the procedure as soon as six weeks into pregnancy, but left the law in place in the meantime.

Why it matters: The court is moving extraordinarily fast on the Texas cases, compressing into just a few days a process that normally takes months. And that schedule means the court will take up Texas' ban a month before it hears another major abortion case — a challenge to Mississippi's own 2018 ban on abortions after 15 weeks.