American oil stocks like Chevron (NYSE:CVX) and Exxon-Mobil (NYSE:XOM) are rising on news that Saudi Arabia has agreed to further reduce its oil production by 1 million barrels/day.

Chevron will open this morning at about $158, up 1.25%, after rising 3.8% on June 2. Exxon-Mobil is up to $107.25, up 1.5%, after a 2.3% rise on Friday, when the Saudi move was just a rumor. So far, in 2023, Chevron is down 10%, and Exxon-Mobil is down less than 1%. Oil producers like EOG Resources (NYSE:EOG) and Pioneer Natural Resources (NYSE:PXD) also rose about 1.5%.

Crude oil prices showed a bigger reaction than the stocks. Brent Crude, the world standard, is up 2.5% to $78/barrel. WTI Crude, the U.S. standard, is up 2.6% to $73.65 amid renewed predictions by analysts that prices will rise to $100/barrel.

Falling Demand, Russian Supply

Crude prices have been generally falling over the last year as the shock of the Russia-Ukraine war flows through the markets. Brent crude was trading at over $120/barrel a year ago.

The latest supply cut should mean higher gas prices down the road. The Saudis reportedly need a price of $81/barrel to break even on their enormous social and capital spending.

OPEC members previously agreed to cut production in April. The Saudi cut is voluntary and unilateral. Oil prices have been down partly because Russia is exporting oil at a discount, in violation of Western sanctions, putting downward pressure on the market price.

Oil Stocks: What Happens Next?

Saudi Arabia is trying to show the world that it controls the world price of oil. But that price remains under pressure due to Russian production, risks of a global recession, and rising supplies of lower-cost and increasingly efficient renewable energy.

At the time of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.