Saudi Arabia's Crown Prince Mohammed bin Salman sits beside Russia's President Vladimir Putin at the G20 Summit in Osaka, Japan, June 28, 2019. Photo: Jacques Witt/AFP via Getty Images

The OPEC+ group led by Saudi Arabia and Russia finalized plans Sunday to steeply cut oil production by a combined 9.7 million barrels per day, Bloomberg and Reuters report, capping a tumultuous, days-long stretch of international talks that included the U.S. Additional cuts are expected from producers outside the OPEC+ group.

Why it matters: The agreement marks oil producers' first coordinated response to the COVID-19 pandemic, which has caused an unprecedented collapse in global oil demand and pushed prices to very low levels.

  • As Axios reported Friday, the deal is expected to help the market avoid complete collapse, but it won't prevent substantial damage to the sector.
  • The demand and price declines are causing distress for U.S. oil producers and drilling contractors, who are steeply cutting spending and beginning to pare staff.

The intrigue: President Trump has been touting his involvement in the negotiations and has held direct talks in recent days with the heads of Russia, Saudi Arabia and Mexico.

  • He tweeted on Sunday: "The big Oil Deal with OPEC Plus is done. This will save hundreds of thousands of energy jobs in the United States. I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia. I just spoke to them from the Oval Office. Great deal for all!"

What's next: All eyes will now be on the market response to the agreement when oil futures trading resumes Sunday evening.

Driving the news: Sunday's reported deal follows a tentative agreement Thursday that was temporarily derailed by Mexico's opposition to its level of allotted cuts, as well a wider G20 energy ministers meeting Friday and talks that stretched into the weekend.

  • Per multiple reports, Mexico will agree to cut its production by 100,000 barrels per day, which is 300,000 barrels per day less than its allotment in Thursday's tentative deal that Mexican officials rejected.
  • Trump said Friday that he has offered to help Mexico "pick up some of the slack," though there have not been details on the agreement.

The big picture: "The U.S., Brazil and Canada will contribute another 3.7 million barrels as their production declines," Bloomberg reports, adding that OPEC officials are waiting to hear from more G20 members.

  • The U.S., the world's largest producer, has not offered firm production cuts, but Trump and the Energy Department have emphasized that market forces will bring U.S. declines.
  • At Friday's G20 meeting, Energy Secretary Dan Brouillette noted estimates that U.S. production is projected to fall by 2 million barrels per day by year's end and perhaps more.

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Ben Geman, author of Generate
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