Mexico reaches deal freeing up way for OPEC output cuts

Mexico says it has reached an agreement with the United States that will allow it to agree to a deal on production cuts with OPEC, Russia and other countries. Mexico President Andrés Manuel López Obrador said on Friday that he agreed with the U.S. President Donald Trump that the U.S. will compensate what Mexico cannot add to the proposed cut during OPEC conversations.

López Obrador said that he spoke with Trump on Thursday and both agreed that Mexico cut its oil production by 100,000 barrels per day and that the U.S. will add a cut of 250,000 barrels per day to what it has already agreed. Mexico refused to cut 400.000 barrels per day.

"We held out until the end because it has cost us a lot of effort to increase petroleum production," López Obrador said. López Obrador has made increasing Mexico's oil production and righting its heavily-indebted state oil company, Pemex, a priority of his presidency. Production had been declining for years.

"We argued that it was difficult for us to cut production as much as they were asking," he said. He said Mexico was asked to cut 400,000 barrels per day and then 350,000 barrels per day.

Before reaching the agreement with the United States, López Obrador said Trump read him a list of all the other countries that had agreed, noting that only Mexico refused. López Obrador said he explained to Trump why and that's when Trump proposed covering Mexico's gap.