OPEC and its allies could cut production by more than a million barrels a day at a rescheduled meeting this month, as policymakers work to arrest a double-digit collapse in the price of oil.
"I think it is a 'go big or go home' moment for the organization," Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC Monday.
"If you are going the route of an extraordinary meeting, you will have to come up with a substantial reduction in order to prevent the market from further tanking," she said, adding that OPEC may potentially cut production in the "1 million (barrel) plus range" this month. The Wall Street Journal also reported on Monday, citing OPEC officials, that kingpin Saudi Arabia was considering an option to cut by 1 million barrels a day to jolt markets.
Representatives from OPEC are reportedly planning to meet on Tuesday and Wednesday in Vienna to discuss options to mitigate the impact of a loss of demand arising from the deadly coronavirus outbreak.
Various scenarios are under active consideration. While Croft suggested OPEC could cut "potentially in the million plus range," other analysts have suggested a smaller cut may be more likely.
"We're expecting production cuts to the tune of about 500,000 barrels per day," Yogi Dewan, CEO of Hassium Asset Management, told CNBC's "Capital Connection."
"OPEC is looking at this very, very carefully, just thinking to themselves, we need to do something here just to help support oil prices," he added.
U.S. West Texas Intermediate was trading at $51.51 a barrel on Monday, having fallen more than 15% since the start of the year. Brent crude traded at $56.26 a barrel, having fallen 13% in the same period. Brent is now at its lowest level since January 2019.
Oil has struggled following the outbreak of a new coronavirus in China that was first reported in late December and has spread globally in recent weeks. China's National Health Commission said there have been 17,205 confirmed cases and 361 deaths in the country as of the end of Sunday.
OPEC and its allies last year agreed to reduce supply by 1.7 million barrels per day until its next meeting in March 2020, but the group is now likely to reschedule its March 5-6 meeting for February, underscoring the severity of the situation and ongoing price declines.
Reports say the energy alliance's Joint Technical Committee, a non-ministerial sub group that reviews the oil market, will meet on Tuesday and Wednesday in Vienna, while a full OPEC meeting is likely to follow next week.
According to Reuters reports, Russia's Energy Minister Alexander Novak said he would be open to an earlier meeting, while Saudi Arabia's energy minister, Prince Abdulaziz bin Salman, said OPEC+ would step in to bolster prices if needed.
OPEC President Mohamed Arkab has also said the meeting could be moved to February, according to the Algeria Press Service.