OPEC and Russia Reach Historic Deal to Cut Oil Production

After a months-long oil price war, Russia and OPEC agreed to a 10 million barrel cut to daily production on April 9. As the biggest cut in history, the agreement is designed to support the oil market against plummeting demand amid the coronavirus pandemic. As market demand decreases by the day, oil supply has remained relatively constant, creating a dangerous oversaturation of the market that could collapse the industry.

Instructors, click the link below to download this week’s lecture for use in your classroom. The deck contains a writing prompt and a debate question as well as other assessment questions.

Download the PowerPoint Lecture Spark for OPEC and Russia Reach Historic Deal to Cut Oil Production

Links

“Saudi Arabia and Russia reach deal to cut oil production by 10 million barrels per day”
https://foreignpolicy.com/2020/04/10/saudi-arabia-russia-deal-cut-oil-production/
 
“Saudi Arabia, Russia strike deal to reduce oil production amid market tumult”
https://thehill.com/policy/energy-environment/491993-saudi-arabia-russia-strike-deal-to-reduce-oil-production-amid
 
“Record deal to cut oil output ends price war”
https://www.bbc.com/news/business-52264546

“Will Saudi-Russia deal to end the oil price war be enough as coronavirus-battered global economy grinds to a halt?”
https://www.scmp.com/comment/opinion/article/3079257/will-saudi-russia-deal-end-oil-price-war-be-enough-coronavirus
 
“Saudi-Mexican clash halts record oil cut deal despite Trump pressure”
https://www.reuters.com/article/us-global-oil-g20-energy/saudi-russia-seek-to-finalise-oil-cuts-in-g20-talks-want-u-s-involved-idUSKCN21S19K

“These are the three big things to focus on from OPEC and the G-20 meetings over the next 48 hours”
https://www.cnbc.com/2020/04/09/these-are-the-three-big-things-to-focus-on-from-opec-and-the-g-20-meetings-over-the-next-48-hours.html
 
“After OPEC+ pact, G20 nations try to nail broader oil deal”
https://www.aljazeera.com/ajimpact/opec-pact-g20-nations-nail-broader-oil-deal-200409205140736.html

Assessment

• Writing: Describe the key elements surrounding the recent 2020 oil price war between Russia and Saudi Arabia. Was there a clear winner or did the coronavirus pandemic force a stalemate?
• Debate: Regardless of what comes out of these negotiations, it won’t be enough to balance the market. The goal is only to minimize the damage until the global economy can get back on its feet. 
• Poll: Will the agreed cut in oil production be enough to prevent the oil market from collapsing?
• Short Answer: Is the United States likely to back these global cuts to oil production?

Current events quiz:

1) The recent Russia-OPEC deal will result in a _____ cut to daily oil production?

a. 15 million barrel
b. 5 million barrel
c. 10 million barrel
d. 25 million barrel

2) Which of the following is the largest oil producing state in the United States?

a. Texas
b. California
c. Alaska
d. North Dakota

3) What does the acronym OPEC stand for?

a. Oil Producing & Exporting Countries
b. Organization of Petroleum Exporting Countries
c. Oil Production & Energy Commission
d. Oil Production & Efficiency Committee

4) Global demand for oil has dropped by 50% due to the coronavirus pandemic (T/F)

5) OPEC dominance over the oil market has waned over the year (T/F)

6) The world is currently being oversupplied by 25 million to 30 million barrels per day of oil. (T/F)

Answers:

1) C

2) A

3) B

4) False

5) True

6) True

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