VIENNA (AFP) – OPEC ministers began arriving here Thursday on the eve of a key meeting at which the cartel is set to cut its oil output, to help lift crude prices hit by a drop in demand caused by an economic slowdown.
Iran’s oil minister said on arrival in the Austrian capital that the Organization of Petroleum Exporting Countries should cut production by two million barrels per day when it meets on Friday.
“Two million will stabilise” the market, Gholam Hossein Nozari told reporters.
“The rate of reduction of demand is good for a cut,” said Nozari.
Analysts expect the cartel to decide on a reduction of at least one million barrels per day.
OPEC produces 40 percent of the world’s oil and its official output quota stands at 28.8 million barrels per day.
Iran is the second largest exporter in OPEC and its economy is heavily dependent on oil and gas income. OPEC kingpin Saudi Arabia is the world’s biggest exporter of crude.
Oil futures on Wednesday tumbled to 16-month lows, mainly on news that demand for crude is slumping in the United States, the world’s biggest energy consumer.
Prices slid under 65 dollars a barrel in London, down about 56 percent from a record high of 147.5 dollars reached in July.
They recovered slightly in Asian trading on Thursday, with Brent North Sea crude up 24 cents at 64.76 dollars a barrel.
OPEC President Chakib Khelil said in Vienna late on Wednesday that the cartel had to weigh the impact of a prospective decision to cut oil output on both consumers and producers hit by a global financial crisis.
“This is going to be a very important meeting” said Khelil, who is also energy minister for OPEC member Algeria.
“It comes in the middle of a financial crisis where lots of countries have been affected,” added Khelil in reference to both oil-consuming and producing nations.
He said that OPEC did not want producers, affected by the financial crisis, to be further hit by “very low” oil prices, which reduce their incomes.
Friday’s meeting in Vienna, home to OPEC’s headquarters, has officially been called “to discuss the global financial crisis, the world economic situation and the impacts on the oil market.”
It was originally planned for November 18 but has been brought forward, a switch analysts said was because OPEC wanted to quickly bring a halt to tumbling prices.
Khelil on Wednesday noted that crude stocks were currently “very high.”
He added: “There is an excess of supply and some of us are not able to sell the crude. I think the question of reduction has to be discussed” on Friday.
Khelil also said that non-OPEC oil producers should consider cutting output. Russia is the largest non-OPEC oil producer.
Russian President Dmitry Medvedev on Wednesday told the cartel’s secretary general he wanted closer cooperation with the organization.
“For our energy institutions, cooperation with OPEC in forming energy policy is a key priority,” Medvedev told OPEC Secretary General Abdalla Salem El-Badri in Moscow.
“Russia is also a major producer and exporter of oil and is interested in supporting stable, predictable oil prices,” Medvedev said.
Earlier the OPEC secretary general said he would not be asking Russia to join in any arrangement to support prices.
“I will not ask Russia to cut production. I will request an exchange of information about the situation on the market and the financial crisis,” he said.
British Prime Minister Gordon Brown last week said it was “absolutely scandalous” that OPEC members were considering cutting production “so they can push up the price of oil” in times of economic turmoil.
El-Badri on Tuesday hit back, insisting that OPEC had no responsibility to keep production high and oil prices low to ease pain in the West caused by the credit crunch.