Oil and gas output from some of the world’s top oil companies is set to drop by over 12% in the second quarter of 2020 to levels not seen in at least 17 years, according to Reuters calculations.
The output cuts are driven by an unprecedented drop in oil consumption due to coronavirus-related movement restrictions that have led to a surge in supplies and a collapse in crude prices to levels not seen in more than two decades.
Four of the top publicly-traded oil and gas producers, known as oil majors, have in recent weeks outlined plans to sharply reduce production from Iraq to the shale basins in the United States.
“Our output will be down in the second quarter, and it is very uncertain how the rest of year will unfold,” BP Chief Executive Officer Bernard Looney told Reuters last week.
BP said it will reduce its U.S. shale oil output by 70,000 barrels of oil equivalent per day (boepd) in 2020, around 14% lower than its 2019 output of 499,000 boepd.
It is also cutting in other countries, including in OPEC nations and other major producers including Russia and Azerbaijan that agreed in March to cut output by an unprecedented 23%, Looney said.
Royal Dutch Shell Chief Financial Officer Jessica Uhl said that in some cases the production cuts are due to logistical problems such as lack of storage.
Exxon Mobil and Chevron are slamming the brakes on oil output, with plans for combined global shut-ins of 800,000 barrels per day in response to plunging crude prices.