Will the US Also Cut Crude Oil Production? ... Texas Considers 20% Reduction

[Asia Economy Reporter Naju-seok] The United States is also considering the possibility of government-level production cuts. There is a possibility that a 20% production cut order may be issued to major oil drilling companies in Texas, one of the major oil production hubs in the US.

On the 14th (local time), the Texas Railroad Commission, which determines oil production volumes, will hold a meeting. The Railroad Commission, which has not convened since the 1970s, is meeting due to the collapse of oil prices caused by demand contraction from the COVID-19 pandemic and the oil price war triggered by Saudi Arabia and others.

The US oil industry publication OilPrice.com reported that "from the 1st of next month, a 20% production cut order may be issued to major oil drilling companies."

The Texas Railroad Commission is a committee that can decide on oil production volumes within the Texas region, and if two out of three commissioners agree, production cut orders can be issued. Ryan Sitton, chairman of the Texas Railroad Commission (TRC), also stated, "If a significant level of production cuts is made, it can prevent a meltdown of the oil-related industry."

[Image source=Reuters Yonhap News]

Earlier, OPEC+ (the Organization of the Petroleum Exporting Countries (OPEC) member countries and non-OPEC coalition) decided to cut daily oil production by 9.7 million barrels starting from the 1st of next month to prevent oversupply.

Within the US, as profitability declines, shale companies such as Pioneer Natural Resources and Parsley Energy have requested the Texas Railroad Commission to issue production cut orders.

However, large energy companies like Exxon are known to oppose production cuts at the Railroad Commission level. They argue that "the most efficient way is for supply to be determined by market conditions," and claim that "if quotas are set or forced production cuts are implemented, other competing companies within the US or overseas oil-producing countries will benefit."

This content was produced with the assistance of AI translation services.