A power plant in Mandalay uses natural gas supplied by the China-Myanmar Crude Oil &Gas Pipeline Project to generate electricity. (Photo: Courtesy of CNPC)
Top oil-producing countries agreed on "historic" output cuts to prop up prices hammered by the coronavirus crisis and a Russia-Saudi price war, sending crude prices soaring on Monday.
The US benchmark West Texas Intermediate (WTI) climbed 7.7 percent to $24.52 a barrel in early Asian trade while Brent was up five percent at $33.08.
OPEC producers dominated by Saudi Arabia and allies led by Russia thrashed out a compromise deal via videoconference on Sunday after Mexico had balked at an earlier agreement struck on Friday.
In the compromise reached Sunday they agreed to a cut of 9.7 million barrels per day from May, according to Mexican Energy Minister Rocio Nahle, down slightly from 10 million barrels a day envisioned earlier.
OPEC Secretary General Mohammad Barkindo called the cuts "historic."
"They are largest in volume and the longest in duration, as they are planned to last for two years," he said.
The agreement between the Vienna-based Organization of Petroleum Exporting Countries and partners foresee deep output cuts in May and June followed by a gradual reduction in cuts until April 2022.
Barkindo added that the deal "paved the way for a global alliance with the participation of the G20."
Saudi Energy Minister Prince Abdulaziz bin Salman, who chaired the meeting together with his Russian and Algerian counterparts, also confirmed that the discussions "ended with consensus."
US President Donald Trump welcomed a "great deal for all," saying on Twitter it would "save hundreds of thousands of energy jobs in the United States."
He added he "would like to thank and congratulate" Russian President Vladimir Putin and Saudi Crown Prince and de facto leader Mohammed bin Salman.
The Kremlin confirmed the joint phone call, adding that Putin and Trump agreed on the "great importance" of the deal.
"This is good," Canadian Natural Resources Minister Seamus O'Regan tweeted. "We welcome any news that brings stability to global oil markets."
Initial reticence from Mexico to introduce output cuts had led to a standoff that cast doubt on efforts to bolster oil prices, pushed to near two-decade lows.