On March 9, 2020, OPEC (Organization of the Petroleum Exporting Countries) and its allies, commonly known as OPEC+, agreed on a significant production cut in an attempt to stabilize the oil market and counteract the impacts of the COVID-19 pandemic.

Under the agreement, OPEC+ would reduce oil production by 1.5 million barrels per day from April to June. Saudi Arabia, the de facto leader of OPEC, would undertake the lion`s share of the cut by reducing its output by one million barrels per day.

The announcement of the agreement sparked a rally in oil prices, with Brent crude futures surging by over 10 percent, hitting $52.99 per barrel. The market welcomed the production cut as a decisive measure to address the global oil glut caused by the demand destruction wrought by the coronavirus outbreak.

However, not all oil-producing countries were on board with the deal. Mexico refused to sign on, forcing OPEC+ to readjust the quotas to accommodate Mexico`s stance. Mexico agreed to cut its output by 100,000 barrels per day instead of the original 400,000 barrels per day agreed upon by OPEC+.

The OPEC agreement in March 2020 marked a crucial moment in the oil market as it signaled the willingness of major oil-producing nations to work together to support prices during a period of unprecedented demand destruction. The production cut was a necessary measure to prevent a total collapse of the global oil industry and to shore up the economies of oil-producing nations.

However, the long-term effectiveness of the OPEC+ agreement hinges on a rebound in demand for oil as the world emerges from the COVID-19 pandemic. Only time will tell if the production cut was enough to stabilize prices in the face of the significant economic and political challenges facing the global oil industry in the months and years to come.