London - Opec will on Friday announce it is cutting oil output to help lift crude prices that have dived 55% since striking record highs in July, as a global economic slowdown slashes demand, analysts said.
The Organisation of Petroleum Exporting Countries, whose 12-member countries together pump about 4% of the world's oil, said on Thursday that its special ministerial meeting in Vienna would be brought forward to October 24 from mid-November.
On Thursday the price of Brent North Sea crude dived to a 17-month low point of $65.45 a barrel, which compared with a record high of $147.50 just three months ago when supply worries had sent prices rocketing.
"The collapse in oil prices in recent days has likely sent Opec into a panic," said Capital Economics analyst Hugo Navarro.
"The oil-producing cartel has advanced the timing of its extraordinary meeting from the 18th November to next Friday, where we think it will announce a cut in production as large as 1.5 million barrels per day.
"But any bump in prices is likely to be short-lived," added Navarro, citing the fact that he along with many other economists expect a global recession in 2009.
British Prime Minister Gordon Brown on Friday said it was "absolutely scandalous" that oil producing countries were considering cutting production "so they can push up the price of oil."
Opec, led by the world's biggest oil exporter Saudi Arabia, has not officially indicated whether production levels would be altered at its meeting.
But Algerian Energy Minister and current Opec chief Chakib Khelil said on Saturday said Opec should order a "substantial" cut in oil output.
Opec rescue plan
"There will be a reduction in production at the next extraordinary meeting of Opec, and it will have to be a substantial one to get the balance right between supply and demand," he told reporters.
"If it has to be 1.5 million barrels per day, or two million barrels per day, that's what it will be," Khelil added, during a visit to the southern Algerian province of Tamanrasset.
Khelil said that Opec wanted to see oil prices "remain stable" throughout the first half of 2009.
Many analysts are forecasting Opec to slash output by at least one million barrels per day, although Olivier Jakob of oil market analysis group Petromatrix said a cut may be limited to 500 000 bpd.
"Everyone these days is getting a rescue plan and Opec has decided it also wants one," said Jakob, in reference to the multi-billion-dollar government bailouts of banks around the globe in recent weeks.
"We do not think that Opec will have moved its meeting from mid-November to next Friday if it had not already decided on a cut," noted Jakob.
"The only question we see is to whether it will be a 500 000 bpd or a one million barrel cut." Opec's official production quota stands at 28.8 million bpd.
Iran's ambassador to the cartel, Mohammad Ali Khatibi on Saturday described the slump in oil prices as "worrying." Iran, which has called for a cut in production, is Opec's second largest exporter and its economy is heavily dependent on income from oil and gas.
'Clearly concerned'
Opec's special meeting in the Austrian capital, home to the cartel's headquarters, has officially been called "to discuss the global financial crisis, the world economic situation and the impacts on the oil market."
However after advancing the meeting's date, analysts are in no doubt that the organisation will use it to announce a cut to production.
"The group is clearly concerned about falling prices due to waning demand, with (Opec-member) Qatar already saying that the exporting group is likely to cut production by at least one million barrels per day," said Nimit Khamar, oil analyst at the Sucden brokerage.
Opec-member Libya has also officially called for lower oil production to shore up prices. Brent North Sea crude closed Friday at $69.60 a barrel.
New York's light sweet crude ended the week at $71.85. It had struck a record high of $147.27 in mid-July.
"Some cartel members probably need prices close to $100 a barrel to balance their budgets," said DnB NOR Markets analyst Torbjorn Kjus.
On Wednesday, Opec cut its estimate for growth in oil demand this year and next largely because of an "excessive" easing of demand in the United States.
Opec comprises Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
Iraq is the only member without an output quota owing to persistent unrest in the country.
- AFP