President Trump says he put Mexico “over the barrel” to force a deal to reduce global oil production as the coronavirus tanks demand.
Trump said Friday that Mexico will cut production and the US will “help Mexico along” by doing the same. In exchange, Mexico will repay the US, he said.
Trump said Mexico’s president Andrés Manuel López Obrador agreed in a Thursday phone call to cut production by 100,000 barrels a day. In exchange, the US will cut 250,000 barrels, he said.
Trump is seeking to broker an international agreement after a dispute between Russia and Saudi Arabia, the largest producer in the Organization of Petroleum Exporting Countries.
The US is the world’s top oil producer, followed by Saudi Arabia and Russia. Trump this week inserted himself as a mediator.
Mexico produces about as much as Nigeria and Venezuela, which are OPEC members.
Trump’s rollout during a White House press conference was light on specifics, including how Mexico would repay the US, how he would achieve a US production cut and whether a deal actually had been firmed up.
On Friday, before the briefing, Trump spoke with Russian President Vladimir Putin.
“We are trying to get Mexico, as the expression goes, over the barrel,” Trump said at the White House briefing. “And Mexico is committing to do 100,000 fewer barrels. President [Obrador] and I spoke last night. We have a great relationship.”
“The United States will help Mexico along and they’ll reimburse us sometime at a later date when they’re prepared to do so,” Trump said. “And we had a great conversation but we’ll find out how that all works out. As you know they’re trying to get rid of the glut of oil.”
Trump said reducing production could safeguard US oil industry jobs.
Mexico’s president “did have some political difficulty with it, frankly, and I understand that too,” Trump said. “And it’s a small amount for us, it’s a large amount from Mexico but it’s a very small amount for the United States…. We’re number one in the world we want to keep it that way. So we’re helping Mexico out. We will be reimbursed in a form, sometime in the future.”
Trump stirred confusion saying later in the briefing that “it doesn’t cost us anything” to cut production because the oil remains in the ground.
But Trump added that the deal wasn’t final: “We will be reimbursed in the future, maybe in the near future, maybe in the more distant future — but we’ll be reimbursed by Mexico in a certain way and it’ll be fine. But we get Mexico over the hump. Now with all of that being said, that doesn’t mean the deal is going to happen anyway because they still have a lot of different states.”
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