Multiple news outlets are reporting that Saudi Arabia and Russia have reached an agreement in principle to reduce their oil production. The move by two of the world's top oil-producing nations would help stabilize a market that has been under siege. Cratering demand amid the COVID-19 outbreak has come at a time when those nations have battled over market share, causing crude oil to pile up in storage, putting intense pressure on pricing.
The Wall Street Journal is reporting that Saudi Arabia will remove 4 million barrels (BPD) a day of supply in April, while Russia will kick in with an additional 2 million BPD reduction. Other members of OPEC as well as non-member nations will reportedly participate in the coordinated effort to stabilize the market. A Reuters report, which cites sources within both Russia and Saudi Arabia, pegs the overall reduction as high as 20 million BPD.
Those additional cuts would come from both OPEC members and non-members, including potentially Canada, Brazil, and maybe even the U.S. One U.S. producer, Continental Resources (NYSE:CLR), has already reduced its production by 30%. Meanwhile, several in Texas have pledged to participate in a 20% voluntary reduction if others join a coordinated effort. However, large-scale producers ExxonMobil (NYSE:XOM) and Occidental Petroleum (NYSE:OXY) oppose the idea of a mandated output reduction in the state.
Leading producers in Canada, on the other hand, are have signaled their support for a federally mandated cut. The country's largest producer, Canadian Natural Resources (NYSE:CNQ), said it would support an output curb, joining others like Cenovus Energy (NYSE:CVE) in favor of the idea. They could combine to reduce the country's output by as much as 1.5 million BPD.