Opec and nations including Russia have agreed to boost oil prices by cutting as much as 10 million barrels a day in production.
Even more countries, including the United States, were discussing their own cuts in what would be an unprecedented global pact to stabilise the market.
The agreement between Opec and partner countries aims to cut 10 million barrels per day until July, then an eight million barrels per day cut through to the end of the year, and six million a day for 16 months beginning in 2021.
Mexico had initially blocked the deal but its president, Andres Manuel Lopez Obrador, said on Friday that he had agreed with US President Donald Trump that the US will compensate what Mexico cannot add to the proposed cuts.
That paves the way for cuts that experts estimate could reach 15 million barrels a day in all – about 15% of world production.
Such a move would be unprecedented both in its size and the number of participating countries, many of whom have long been bitter rivals in the energy industry.
The price of crude is down by more than 50% since the start of the year and while that helps consumers and energy-hungry businesses, it is below the cost of production for many countries and companies.
That has strained the budgets of oil-producing nations, many of which are developing economies, and it has pushed private companies in the US towards bankruptcy.
Analysts warn even these proposed cuts may not be enough to offset the loss in demand over the longer term, as the coronavirus pandemic has decimated demand for energy around the world.
“Covid-19 is an unseen beast that seems to be impacting everything in its path,” said Opec secretary-general Mohammed Barkindo at the start of the meeting. “There is a grizzly shadow hanging over all of us. We do not want this shadow to envelope us. It will have a crushing and long-term impact on the entire industry.”
Mexico had baulked at cutting its output by the requested 400,000 barrels a day. Mr Obrador said Mexico will instead cut its oil production by 100,000 barrels per day from its current level of 1.7 million barrels a day.
The US will add a cut of 250,000 barrels per day to what it has already agreed.
More nations were expected to add to the effort, with Saudi Arabia chairing a G20 virtual meeting of energy ministers to discuss the oversupply in the market.
The meeting is expected to bring on board a wider number of countries, including the United States. Saudi media quoted energy minister Prince Abdulaziz bin Salman as saying in his opening remarks that the pandemic means it is more vital than ever that reliable and affordable energy supplies are available. The meeting also includes representatives of Opec.
The oil market was already oversupplied when Russia and Opec failed to agree on output cuts in early March. Analysts say Russia refused to back even a moderate cut because it would have only served to help US energy companies that were pumping at full capacity. Stalling would hurt American shale-oil producers and protect market share.
Russia’s move enraged Saudi Arabia, which not only said it would not cut production on its own but said it would increase output instead and reduce its selling prices in what became effectively a global pricing war.
In the time since, prices have collapsed as coronavirus has largely halted global travel.