On Sunday, OPEC and its allies, including Russia, decided to increase crude oil production cuts to 3.66 million barrels per day (bpd), or 3.7 percent of global demand.
Saudi Arabia announced the voluntary cuts, claiming they were a preventative measure intended to stabilize the oil market. They will start in May and last until the end of 2023.
The announcement of the production cut had an immediate effect on gasoline futures, and this effect will be felt by US drivers much more quickly than the rise in oil prices. The most closely followed wholesale gasoline price, the RBOB, increased by about 8 cents per gallon, or about 3%, on April 3, 2023.
Energy stocks surged higher on the news and in particular, Exxon (XOM) stock and Occidental Petroleum (OXY) stock.
ExxonMobil is a multinational oil and gas corporation that engages in exploration, production, refining, transportation, and marketing of petroleum products. The company operates in several segments including upstream, downstream, and chemical. The upstream segment involves the exploration and production of oil and gas reserves, while the downstream segment involves refining and marketing of petroleum products. The chemical segment involves the production of petrochemicals used in various industrial applications. Exxon is also involved in the development of alternative energy sources, such as biofuels, wind, and solar power.
Occidental Petroleum Corporation is an American multinational oil and gas exploration and production company. It is one of the largest oil producers in the United States, primarily operating in the Permian Basin in Texas and New Mexico. Occidental also has operations in other regions of the world, including Latin America and the Middle East. In addition to oil and gas exploration and production, Occidental also engages in the transportation, marketing, and sale of crude oil, natural gas, and other petroleum products. The company also has a chemicals segment that produces basic chemicals, vinyls, and performance chemicals.