For the past several weeks, oil companies have slashed prices across the board for gas and diesel. While some might initially think this was entirely caused by the ongoing COVID-19 pandemic the disease is only partially to blame.

The recent price drop in petroleum-based products was caused by Saudi Arabia along with other oil-producing nations in the Middle East (OPEC) which are currently locked in a price war with another major oil producing nation: Russia. With no either side looking to let up, the price of fuel has hit an all-time low; the current price of crude oil is closer to $20 per barrel.

Now it looks like an agreement has been met as the two “warring” countries, along with the U.S. have agreed to slash oil production. Confirmed via a video conference meeting last Sunday, members of OPEC, along with other oil-producing nations have come to an arrangement to cut global production of oil by 10%.

The oil-producing countries have yet to state how much oil they will reduce, but OPEC did say they were looking at slashing production by 9.7 million barrels per day. In the coming weeks, members of OPEC will continue to slash oil production until the price of crude oil stabilizes.

With the cutting of production set, prices crude oil per barrel are expected to rise once more. In fact, the price of oil per barrel actually went up by $1 in some regions, including Asia.

But with the COVID-19 pandemic still grounding airplanes and limiting ground travel of vehicles all over the world, the demand for gasoline, diesel, as well as jet fuel are still very low. In addition, global oil demand is estimated to have fallen by a third as around 3 billion people are locked down in their homes due to the coronavirus.

With gas companies in the Philippines recently imposing a price hike on both gasoline (PhP 0.55/liter) and diesel (PhP 0.15/liter), we won't be surprised if prices will continue to go up, albeit not by much.