Saudi Arabia will reduce oil supply next month in response to lower demand, and more cuts could follow next year.
Speaking at a conference in Abu Dhabi, Saudi energy minister Khalid Al Falih said the kingdom's oil output would fall by 500,000 barrels per day in December.
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Members of the Organization of Petroleum Exporting Countries (OPEC) and its allies could reduce supply further next year if needed, he added.
"The consensus among all members is that we need to do whatever it takes to balance the market," Al Falih said. "If that means trimming supply by a million [barrels per day], we will do it."
Global oil prices tumbled into a bear market last week, down more than 20% from their recent peak. Fear of a global economic slowdown and a decision by the United States to allow some countries to keep buying Iranian crude oil following the reintroduction of sanctions have hit market sentiment.
BP (BP) CEO Bob Dudley said the Saudi cut represented "quite a bit of oil."
"That probably would adjust sentiment and get [prices] back into a corridor with less volatility," he told CNN Business.
A senior OPEC source said the cartel and other major producers are discussing cutting production by as much as 1.2 million barrels per day. A decision could be taken at the next OPEC meeting in Vienna on December 6.
A cut of that magnitude would reverse a decision in June by OPEC and Russia to pump over a million barrels per day more to make up for the expected loss of Iranian exports.
"The size of any potential cut will depend on how much oil demand growth slows down, how much Iranian supply falls due to US sanctions, and how fast US supply rises," said Giovanni Staunovo, an analyst at UBS.
Russia appears to need more convincing that it should be cutting production.
Russia's energy minister Alexander Novak said in Abu Dhabi on Sunday it was too early to make a decision to reverse course and cut supply.
"We're going to do everything we can to keep supply and demand inventories within a reasonably narrow band, " Al Falih said on Monday, during a debate moderated by CNN Business' Emerging Markets Editor John Defterios. "We hope that markets will calm down."
Crude prices jumped by as much as 2% on the prospects of reduced supply from OPEC. US crude oil futures were trading around $60.80 per barrel, $1.50 higher than on Friday.
The United States last week said eight jurisdictions — China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey — would be able to continue buying Iranian oil for six months without fear of US penalties under sanctions on trading with Iran.
"The sanctions on Iran have turned out to be a damp squib for the time being with the Trump administration granting exemptions," said Devesh Mamtani, head of investments and advisory at Century Financial, a brokerage firm in Dubai. "The exemptions have even surprised Saudi Arabia as oil supplies from Iran are likely to spike in the coming days," he added.
UAE energy minister Suhail Al Mazrouei, who is also OPEC president, said the cartel wouldn't allow the market to become oversupplied.
"We will assure you that when we meet in December we will go to the market with the solution that will ensure market stability," he said.