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Because it is the first time that Mexico will not yield to pressure from an international body
The oil powers in the world are at stake because Mexico decided not to accept an agreement calling for a 23 percent reduction in its oil production. Approximately 400 thousand barrels per day.
And even though our country will receive assistance from the united States to supplement its quota, the OPEC+ has to accept the proposal, a situation that will decide this April 11.
Here we will tell you what is what has happened in this story:
RUSSIA AND SAUDI ARABIA
For weeks, Russia and Saudi Arabia, two powers of energy, have been fighting over the oil production, and their dispute has caused the fall in the price of crude oil.
That attracted the president of the united States, Donald Trump, with a strong interest in making the prices to stabilize and support the industry of the shale of the united States while he campaigns for re-election in November.
After several weeks, the kings of oil (Russia and Saudi Arabia), they found a common ground on cuts in production, so they called for a meeting with the rest of the oil countries to publicize the proposal.
To this followed a flurry of diplomatic activity, and calls from high level, but it was Mexico who put a stop to this.
López Obrador refused to sign the agreement, even after the 22 other nations signed the pact to cut 10 million barrels per day in an attempt to halt the fall in prices. From his office in the National Palace of Mexico City, the president was concerned about one thing: Petroleos Mexicanos (Pemex).
The mexican oil company, with a debt of more than $ 100 billion, is the centerpiece of his administration to be self-sufficient in the power generation and stop a decrease of the production in 15 years. Trim 400 thousand barrels per day to comply with the agreement of the OPEC+ delaying its ambitious plans to return Pemex to its past glory.
With Saudi Arabia making the whole agreement conditional on the participation of the Latin american country, and in the midst of the growing irritation of the officials of energy involved in a call that lasted until the night in many parts of the world, AMLO was only willing to offer a cut of 100 thousand barrels, or approximately 5.6 percent of Pemex’s production.
Therefore, the secretary of Energy, Dew Nahle decided to stop for a moment to the meeting, as the position of Mexico was already given and they were not going to budge.
As the probability of an agreement faded, López Obrador received a call from someone with a lot at stake: his friend Donald Trump, who engaged in an unexpected relationship.
Even so, when the president of the united States tried to convince the PRD to accept the terms of the OPEC, the leading mexican insisted that Pemex is not able to reduce both its production, said the presidential spokesman Jesus Ramirez.
In the end, the united States agreed to cut 250 thousand barrels of additional to fill the position of Mexico and, in theory, to unlock the general agreement.
“Andrés Manuel made the proposal to Trump and Trump accepted. He was completely cordial,” said Ramirez.
Trump had no choice but to absorb the cut in production because López Obrador was not willing to budge, said a person familiar with the call that is not authorized to speak in public. The president of the united States not asked AMLO specifically anything to change, added the person.
“The united states will help Mexico and compensate us in some time in the future when they are ready to do so,” said Trump on Friday at a briefing of the White House. The chair suggested that the compensation for Mexico could be “in a distant future,” while he argued that “there was a real cost” of limiting u.s. production.
Trump also tried to refer to AMLO as someone who has a “great relationship, great friendship,” saying that he could understand where I was coming from the stance of mexican president about the cuts of production.
The secretary of Energy of Mexico, Dew Nahle, told El Financiero Bloomberg TV later Friday that said what Trump has to do with a matter of cooperation between countries.
“All the countries are working together. In this topic this is. Today the united States is collaborating in this medium of oil. I do not know the day of tomorrow in which Mexico can also work with the united States, whether in agriculture, culture, any topic. I think that in that reference will the expression of the president Trump,” said Nahle.
In addition to Pemex, the posture of AMLO was probably influenced by his conviction that it will require additional cuts in the future to stop an oversupply that saw prices fall the oil by half this year, said another person who asked not to be identified. The president wanted to start the treatment from the base high as possible, said the person.
The position of AMLO is also strengthened by its coverage of sovereign oil, the largest of its kind, that protects the Government’s budget against the price of crude oil falling below $ 49 per barrel this year.
“We resist it to the end because we had a lot of to boost the production,” said lopez OBRADOR on Friday during his press conference morning, when he made public the agreement with Trump. “As we comply with this issue.”
Even so, the president called the cuts in production as a “temporary” and said that Pemex will continue extracting oil.
THE NATIONAL INTEREST
The episode highlights the willingness of the PRD to put their national targets, above all, even if it damages their reputation in the club of oil producers.
Also occurs when you reject the need for stimulus measures mass to dampen an economy affected by the coronavirus, for concern of some in the business elite of Mexico.
“This administration has shown that whatever is the market standard, internationally accepted, common-sense, you are not in your playbook if it is not in line with the will of the president,” said Oscar Lopez Velarde, a law professor at the Ibero-american University who specializes in energy and taxes.
For the specialist, the favor that Mexico asked the united States was not necessary due to Pemex not even reach their production targets due to their critical financial situation and should not increase the production to avoid further losses.
Lopez OBRADOR has tried to reverse a movement of the previous administration to open the energy industry to private investors. Mexico is building the refinery in Dos Bocas, 8 billion dollars, even when the international prices of gasoline collapse.
With information Amy Stillman, Nacha Cattan and Eric Martin