OPEC members are considering oil-production cuts ahead of schedule in order to backstop plunging prices, new report says

Associated PressPrince Abdulaziz bin Salman Al-Saud, Minister of Energy of Saudi Arabia, arrives for a meeting of the Organisation of the Petroleum Exporting Countries, OPEC, and non OPEC members at their headquarters in Vienna, Austria, Friday, March 6, 2020. (AP Photo/Ronald Zak)

  • Some OPEC members are considering cutting oil production right away instead of waiting until a historic deal begins next month, The Wall Street Journal reported Monday, citing sources familiar with the matter.
  • The proposal comes after oil prices fell to record lows, trading below zero for the first time in history as demand craters due to the coronavirus pandemic.
  • Saudi Arabia could begin cutting production immediately under a proposal being considered, according to the report.
  • Watch oil trade live on Markets Insider.
  • Read more on Business Insider.

Saudi Arabia and other OPEC members are considering cutting oil production earlier than next month, The Wall Street Journal reported Monday, citing sources familiar with the matter.

On Monday, oil prices plunged below zero for the first time in history and traded as low as -$US40 per barrel, prompting the kingdom to consider lowering production as soon as possible, instead of waiting until next month when the agreement between Saudi Arabia and Russia is set to begin, according to the report.

Just over a week ago, OPEC agreed on historic production cuts set to begin in May, ending a price war that had erupted between Saudi Arabia and Russia. The threat of production being increased to record levels weighed on prices as the coronavirus pandemic tanked global demand for oil.

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Saudia Arabia could begin cutting production immediately under a proposal being considered, if it aligns with the kingdom’s legal obligations and agreed upon deliveries, according to The Journal. The proposal could be applied to other OPEC countries, the report said.

Oil fell into negative territory to a record low Monday as traders worried about a supply glut, and sellers looked to offload extra barrels, effectively paying people to take it off their hands. Prices were also weighed down by futures contracts expiring Tuesday, sending oil lower as traders exited the positions. If concerns about storage continue as demand remains low, oil prices could see further volatility.

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