(Reuters) - Texas should consider production limits for oil companies in an effort to stabilize crashing prices, one of three commissioners at the state’s oil and gas regulator said Friday.
With U.S. oil prices down more than 60% this year in the face of falling demand from the coronavirus and a price war between Saudi Arabia and Russia, oil executives and regulators are reaching out to the Trump administration to float the idea of cutting Texas oil output 10%, said Ryan Sitton, one of the three elected members of the Texas Railroad Commission, which regulates oil and gas.
The hope is that President Trump could negotiate with Saudi Arabia and Russia and convince them to match the cut, Sitton said, adding that the aim was to “help the president get a deal done.”
Texas has not limited oil production since the early 1970s but regulators have the authority to do so.
Parsley Energy (PE.N) and Pioneer Natural Resources (PXD.N) are among the independent oil and gas companies that want regulators to consider setting limits on how much oil large firms can send to market. [L1N2BD057]
The United States said on Thursday it will begin purchasing domestically produced crude oil for the Strategic Petroleum Reserve in an attempt to try to prop up domestic producers.
Saudi Arabia has chartered about half a dozen supertankers to ship up to 12 million barrels of crude to the U.S. Gulf Coast, as it escalates its fight with Russia for market share.
The coming flood of supply from Saudi Arabia and other producers could result in the largest surplus of crude in history, said global information provider IHS Markit.
Reporting by Jennifer Hiller; Editing by Tom Brown