The nosedive in the price of oil accelerated this week. WTI, the U.S. oil price benchmark, plunged another 29%, closing below $20 a barrel. Fueling the ferocious sell-off are dual shockwaves to supply and demand. Not only has consumption started drying up due to the impact of the COVID-19 pandemic, but OPEC and Russia are also flooding the market with oil following the collapse of their market support agreement. 

This slump has devastated the U.S. oil industry, which needs higher crude prices to survive. While there's nothing it can do to address the consumption issue, it's working on ways to curb supply. The head of Texas oil regulator spoke with OPEC's Secretary-General today to see if the U.S. could help end the price war between Saudi Arabia and Russia, according to a report from The Wall Street Journal. Production cuts are among the options the U.S. oil industry is considering.

Oil pumps working the the background near a drilling rig.

Image source: Getty Images.

Many U.S. producers have already slashed their drilling budgets to adjust to lower oil prices. Diamondback Energy (FANG 1.45%), for example, cut its spending plan by 40%. At that investment level, Diamondback won't complete enough new wells this year to offset the decline of legacy ones, resulting in its output starting to decline by year-end. 

What Texas' oil regulator -- which oversees the nation's top oil-producing state -- might do is immediately force producers to curtail some of their output by shutting off existing wells, which is something it hasn't done since the 1970s. That would help remove some supply from the market so that it doesn't pile up in storage and put even more pressure on pricing. That move might convince OPEC and Russia to consider similar measures to help stabilize the oil market.