New Delhi, Apr 6 (IANS): A bigger global effort to stabilise oil prices involving all major oil producers including the US has begun to see that the current crisis does not escalate further putting several oil producers closure to bankruptcies.

Though the proposed meeting between the oil cartel OPEC and Russia to discuss production cuts had been postponed from April 6 to April 9 as the two sides remain divided on the issue, it now come across that Alberta (Canada's largest oil producing region) and Norway would be joining the meeting to push through larger production cuts needed to stabilise oil prices even through the demand remains soft.

Moreover, Texas oil regulator (Texas is one of largest oil producing region in IS) is to decide on output cut April 21 given the oversupply due to demand collapse. The US is also looking to impose tariffs on oil imports if OPEC+ did not cut output to maintain pressure on the oil cartel to seriously explore the option burying any difference with the Russians.

Crude oil prices declined on Monday with Brent crude falling to $30 per barrel during early trade. Currently, it is trading at $33.51, lower by 1.76 per cent from its previous close. The WTI crude plunged over 3 per cent to $27.37 per barrel.

"The global signals is for sharp production cuts to stabilise oil prices amidst further shrinking of demand due to COVID-19 pandemic. Russia and Saudi Arabia are still to bury their differences but with other larger oil producers coming around for production cuts, a wider agreement looks likely. A larger cut may push oil prices to over $40 barrel quickly," said an oil sector analyst asking not to be named.

According to an analysis done by ICICI Securities, even with US threat of tariff imposition on oil imports if OPEC+ do not cut output and the country making available 30 million barrels of storage capacity to domestic oil companies, and Texas oil regulator hinting at a pro-rata production cuts of about 10 million barrels of oil per day (mbpd), still global supply surplus (15m b/d as per IEA) in Q2CY20 will remain due to steeper demand decline.

But, still with US coming with its own plan on cuts and threatening to reduce oil import or levy higher tariff, itself could push up oil prices. With other big producers in Canada, Norway joining in, it is expected that Russia and OPEC would also come to terms a larger demand mitigation strategy would be in place to prevent bloodbath in oil market that had lost over 50 per cent since the beginning of 2020 calendar years.

"The delay (in Russia OPEC meeting) together with the blame game between Saudi Arabia and Russia for the collapse in oil prices and for targeting US Shale may lead to correction in oil price," ICICI Securities said in its report.

It said that the global developments, however, would be encouraging for ONGC as its margin would get a big boost.

Alberta accounts for 80% of Canada's 4.7m b/d production, and Norway with an of output 1.4m b/d in CY19 and 1.76m b/d in December 2019 is also a major oil producer.

A 20 per cent cut in Texas and Oklahoma (46% of US output) would imply 1.2m b/d output cut. "Sharp decline in demand, inadequate storage and far lower prices than benchmark WTI could mean output cuts in some other states like North Dakota (Bakken). Fall in US onshore oil rig count by 18 per cent (121) in the last three weeks also suggests output decline is imminent," the brokerage said.

"We believe that the Russia-Saudi spat may not be a deal breaker. Some press reports suggest that Russia may want the US to withdraw sanctions imposed on Rosneft for doing business with Venezuela as a quid pro quo for cutting oil output," the report said.