Energy Secretary Dan Brouillette said he’s confident global oil producers will agree to drop production as leaders prepare to meet Thursday to address falling prices.
OPEC members and other oil-producing countries will gather for a virtual meeting as the coronavirus paired with a trade war between Russia and Saudi Arabia has pushed oil prices to their lowest level in 18 years.
President Trump last week floated that the two feuding nations may be willing to drop production by 10 million barrels a day, a move that would help ease the oversupply as demand drops amid the pandemic.
Brouillette, appearing on CNBC’s “Squawk Box,” said those figures might be even higher if other countries can be persuaded to limit production.
“I think they can easily get to 10 million, perhaps even higher. And certainly higher if you include the other nations who produce oil, nations like Canada, Brazil and others, it’s easily, easily done,” he said.
Trump had expressed hope that cuts could limit production by as much as 15 million barrels a day.
“Could be as high as 15 Million Barrels. Good (GREAT) news for everyone!” Trump tweeted of a potential deal between Saudi Arabia and Russia.
American producers are on shaky financial ground, and lawmakers have penned multiple letters to the White House pleading for assistance.
Following meetings with the oil industry last week, Trump this week suggested slapping tariffs on foreign-produced oil or forcing U.S. production cuts — moves opposed by many in the oil industry.
Brouillette’s comments underscored faith in market forces.
“It’s important to remember that whether they reach a formal agreement or not, everyone is going to reduce production as long as we have this demand curve being what it is. There is simply no other choice,” Brouillette said.
“When you produce oil, you have two options. You can either use it as part of the demand, or you can store it, and storage is running out. So I mean, at some point, everyone is going to cut production until we turn the economy back on.”