VIENNA (AFP) — The OPEC oil producer group is expected to leave its official output policy unchanged at a meeting on Tuesday, but pressure is growing for action to reduce supplies in the months ahead.
Oil prices have plummeted from record highs above 147 dollars in July to about 107 dollars, with the OPEC meeting here seen as a test of what price level the cartel wants to defend as global economic growth weakens.
Many analysts expect the 13-nation group to agree to trim its output informally before waiting until later, possibly a scheduled gathering in December or before, to alter its official output target.
The trimming would be achieved by members, mainly powerhouse Saudi Arabia, agreeing to cut excess production above their OPEC quota, which would remove oil from the market but not amount to a formal change in policy.
OPEC President and Algerian Energy Minister Chakib Khelil said on Monday that a cut in production by the group, which pumps 40 percent of world oil, would be discussed.
"Everybody agrees that we will have an oversupply problem of between half a million and one-and-a-half million (barrels per day) by early next year," he said as he arrived in Vienna.
"Of course there is an oversupply," Iranian Oil Minister Gholam Hossein Nozari said as he arrived, underlining Tehran's desire to see the organisation enforce its quota system.
Algeria, Iran, Venezuela and Libya have raised fears of oversupply and suggested the need for a reduction in output, while Kuwait, the United Arab Emirates and Ecuador have called for no change.
At present, the Organization of Petroleum Exporting Countries (OPEC) is believed to be producing about a million barrels per day (bpd) more than its official ceiling of 29.67 million bpd, with Saudi Arabia accounting for most of the excess.
The stakes are entirely different from the last time OPEC met in March, when prices had broken through 100 dollars a barrel and were on a steep upwards trajectory.
This time, oil prices are on the way down approaching 100 dollars -- a level many members, above all the traditional price hawks of Iran and Venezuela, are keen to protect.
The producers face an uncertain outlook for oil demand, with economic growth slowing and consumers across the world taking measures to reduce their energy consumption as prices for heating and transport rise.
Asked about the danger of oversupplying, Qatari Oil Minister Abdullah bin Hamad al-Attiyah replied: "So far this is what the numbers show us, there will be a lower demand (for) oil because of the world economy situation."
Other analysts believe that Saudi Arabia, the de facto leader of OPEC and the world's biggest producer, would be happy to see prices fall below 100 dollars a barrel to help stimulate economic growth.
Saudi Arabian Oil Minister Ali al-Nuaimi, who is yet to comment on the meeting, is expected in Vienna in the early hours of Tuesday.
Kuwait, a Gulf ally of Saudi Arabia, said Monday that it saw no need for a reduction.
"We think that the supply is more than the demand," said Kuwaiti Oil Minister Mohammad Al-Olaim here. "For the time being we think there's no need for a cut in the production because... we are worried a little bit about the slow growth globally."
Under fierce pressure from the United States, Saudi Arabia agreed in May and June to increase production by 500,000 bpd to help calm the then runaway crude market.
Oil prices rose slightly on Monday, with New York's main contract, light sweet crude for delivery in October, rising 71 cents to 106.94 dollars a barrel.
Brent North Sea crude for October climbed 72 cents to 104.81 dollars.
Emirati Oil Minister Mohammed al-Hamili said on Monday that OPEC would keep world markets "well supplied" as he left for the Vienna meeting, scheduled to take place late on Tuesday.
OPEC holds regular meetings to set its production policy, with each member assigned a quota or production target.
The dilemma for producers is how to find a balance between their desire for revenues from high oil prices and the danger that high prices could choke off feeble economic growth and antagonise consumers.
Economic conditions, which determine demand for oil, have worsened in recent months, with many European economies facing recession, the United States struggling and fears growing about the emerging economies of Asia.
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