OPEC and its on-again-off-again partner, Russia, tentatively agreed Thursday to slash oil production by 10 million barrels per day through the next two months.

However, the sweeping agreement hit a roadblock in the late stages of negotiations as Mexico, another non-OPEC member that, like Russia, has partnered the alliance in previous production reductions, refused to accept the proposed cut.

The accord may disintegrate if Mexico, the world's No. 12 oil producer, continues to oppose the production agreement when energy ministers from G-20 nations meet today. Mexico is reportedly seeking to shoulder a smaller portion of the total proposed cut.

"In view of the current fundamentals and the consensus market perspectives, the Participating Countries agreed to … adjust downwards their overall crude oil production by 10.0 mb/d, starting on 1 May 2020, for an initial period of two months that concludes on 30 June 2020," OPEC said in a statement. "The above was agreed by all the OPEC and non-OPEC oil producing countries participating in the Declaration of Cooperation, with the exception of Mexico, and as a result, the agreement is conditional on the consent of Mexico."

In a statement, Kuwait Oil Minister Khaled al-Fadhel told the Associated Press that “at the meeting for the OPEC group that ended at 3 a.m., Mexico disrupted the agreement of all the countries to reduce the production of oil by 10 million barrels a day.” 

Other non-OPEC nations that joined the agreement included Norway, as well as Argentina, Colombia, Ecuador, Egypt, Indonesia, Trinidad and Tobago. Much attention though focused on Russia, the world's No. 3 oil producer, which last month refused to renew a production cut agreement with the OPEC cartel — spurring the organization's leading member, Saudi Arabia, to slash prices and ramp up production.

Hope for a production cut agreement initially sparked a double-digit spike in sagging oil prices ahead of the meeting early Thursday. Benchmark crude prices lost their gains, however, on concerns that the 10 million barrel per day cut — while significant — doesn't yet approach the fall-off in global demand caused by the novel coronavirus, or COVID-19. Analysts estimate that consumption has plummeted by as much as 30 percent, or close to 30 million barrels per day, as countries have instituted travel restrictions, shipping reductions, and a near-halt to much of the economy to slow the spread of the virus.

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