G20 energy ministers held virtual talks Friday as major oil producers scrambled to finalise output cuts to shore up prices, with Mexico announcing a deal with the United States that could end an impasse.
Mexico was the lone holdout in an OPEC-led agreement reached after marathon overnight talks that would see output slashed by 10 million barrels per day in May and June.
The standoff had cast doubt on efforts to bolster oil prices, pushed to near two-decade lows by the demand-sapping coronavirus pandemic and a Saudi-Russia price war.
The G20 talks, hosted by top exporter Saudi Arabia, are expected to seal the deal more widely with non-OPEC countries in the group including Mexico, the United States and Canada.
Under the OPEC deal, Mexico was expected to cut production by 400,000 barrels per day but the country resisted during the overnight talks and demanded the reduction be limited to 100,000.
Speaking to reporters later Friday, Mexico's President Andres Manuel Lopez Obrador said he had reached an agreement with his US counterpart Donald Trump to cut production by 100,000 bpd.
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He added that Trump had agreed to cut US production by 250,000 bpd "as compensation" for Mexico.
There was no immediate comment from Trump, and it was unclear whether the OPEC oil cartel and its allies would agree to the Mexico-US deal.
The production cut agreement hinges on Mexico's consent for it to take effect, the Organization of the Petroleum Exporting Countries said early Friday after an hours-long meeting.
Riyadh, which currently holds the G20's rotating presidency, has said the G20 talks were aimed at ensuring "market stability".
Russian Energy Minister Alexander Novak urged the G20 ministers to act in a spirit of "partnership and solidarity", according to a local television station.
"I hope that (the meeting) will help restore some much-needed stability to oil markets," said Fatih Birol, the head of the International Energy Agency (IEA).
"The extreme volatility we are seeing in oil markets is detrimental to the global economy at a time when we can least afford it."