OPEC battles price dive and faltering economy

International benchmark U.S. crude has slumped by more than 50 percent from a record high of $147.27 hit in July. On Thursday it was trading below $67.

The plunge prompted the Organization of the Petroleum Exporting Countries to bring forward to Friday an emergency meeting originally set for Nov. 18.

As economic slowdown has destroyed demand for oil and stocks have built, most OPEC ministers have said a supply cut was essential.

But they have differed on how much oil should be removed to limit oversupply and protect their economies, while avoiding more pain for the consumers they rely on.

On arriving in Vienna, Saudi Arabian Oil Minister Ali al-Naimi said only that the oil price would be determined by the market. He would not be drawn on the need for any cut.

Earlier Iran's Oil Minister Gholamhossein Nozari said OPEC needed to cut output by two million barrels per day (bpd).

OPEC sources have said at least a million bpd needed to be taken away, while OPEC President Chakib Khelil said it could require more than one meeting to get the right balance between supply and demand and between producer and consumer needs.

"The concern of the producing countries is, whatever decision is made, not to have an impact on increasing the pain of consuming countries," Khelil told a news briefing.,

"The decision should not leave the producer countries in the situation where they will be joining the group of countries which are already suffering from the financial crisis."

DISCIPLINE HARD TO ACHIEVE
Adding to the difficulty of its task, the group could struggle to enforce any reduction it agrees at its formal session, expected to begin early on Friday.

In the past, those members who most needed revenue have been reluctant to limit exports when the market is falling. The producer group's lack of discipline helped to push oil to below $10 during the Asian economic downturn in the late 1990s.

Now, in a period of global financial crisis, even Venezuela and Iran -- which have big social spending plans and are said to have the highest price needs -- have said they can manage for a while on the profits of the record rally.

The most pressing need, they say, is to establish control.

"We need to manage the market. This is very important. When the price of oil is down more than 50 percent, if there is no management, I don't know what will happen," Iran's OPEC governor Mohmammad Ali Khatibi said.

Iran did not have an exact figure for where the oil price should be, Khatibi said, but together with other OPEC countries, Iran has warned oil projects would cease to be economic if the market fell too far.

In that case, whatever OPEC decides, the world's oil supplies would in time begin to flag.

Khelil, who is Algeria's energy minister as well as the OPEC president, told reporters he preferred to see crude at $90 a barrel to ensure oil and gas projects were carried out.

"We know that to the best of our sense, we need $90 to continue the development of these (projects)," he said.

Some analysts say $90 could be a tall order in the near term as financial slowdown shows signs of affecting not just developed, but also emerging economies. They include China, which had been expected to support demand even if it fell drastically in the world's biggest consumer the United States.

"OPEC's major problem is that they have never faced a demand-led surplus before and cutting supply when the other leg is being cut off faster does not restore the balance," analyst David Hufton of PVM wrote in a report.