VIENNA (News Agencies) - Energy chiefs from OPEC countries gathered here Tuesday to order a deep cutback in oil output - much to the alarm of oil importing countries, who fear the move will send prices soaring and threaten economic growth.
Oil ministers from the 11 oil producers in the Organization of Petroleum Exporting Countries (OPEC) want to slash production by 1.5 million barrels a day - more than five percent - from February 1st to underpin world crude prices.
"The size of the reduction will probably be around a million and a half" barrels per day, said Ali al-Nuaimi, oil minister of OPEC kingpin Saudi Arabia, as he arrived for Wednesday's get-together.
"We think the market is oversupplied," al-Nuaimi told journalists. "We are here to steady the market. We want the market to be in a stable mode. Therefore we need to take a reduction."
OPEC ministers are calling for the swinging output cuts to rescue prices, which slumped alarmingly in December after vertiginous gains last year. Brent reference crude was trading at $26.38 per barrel Tuesday morning, after opening at $26.45. It closed at $26.18 late Monday.
Some OPEC hawks want even deeper output cuts to stabilize market supply and demand. Iraq has called for cuts of up to three million barrels a day, while others have mentioned two million as the required volume.
Indonesian oil minister Purnomo Yusgiantoro told journalists as he arrived that he was expecting a cut of 1.5-2 million. OPEC President Chakib Khelil offered the same forecast.
Al-Nuaimi said ministers are likely to decide to cut by 1.5 million now and leave open the possibility of a further tightening of the taps before the end of the northern hemisphere's winter.
A cut of 1.5 million barrels would result in a real fall in output of 1.3 million barrels because some OPEC countries are currently producing below their quota, oil market analysts say.
But from Japan to Europe and the United States, oil importers fear that any reduced OPEC volumes could send crude prices soaring again - threatening an economic slump particularly in the United States.
The London-based Center for Global Energy Research warned in a research paper that OPEC efforts to keep oil prices above $25 a barrel could result in "a serious slowdown in [global] economic growth".
The Saudi oil minister admitted the move would not make the best inauguration present for George W. Bush, who is to be sworn in as president of the world's largest oil importing nation later in the week.
"But Bush is an oil man," al-Nuaimi added. "He will understand."
U.S. Energy Secretary Bill Richardson called on oil producers on the eve of the OPEC meeting not to "act precipitately and make severe cuts in production.
"We are concerned ... that $30 a barrel not be a constant acceptable price. Consumers and producers have agreed ... to a price of $25," Richardson said in Kuwait City.
A prime concern from oil importers is that OPEC cuts will compound already fitful supplies from Iraq.
Iraqi exports slumped to little more than one million barrels a day in December - less than half their usual level - amid a row with the United Nations over the oil-for-food program. Iraq is not sending its minister to the OPEC meeting.
Asked whether reduced exports from Iraq could result in a dangerous drain of crude from the market, Saudi Arabia's al-Nuaimi said: "We do not know what they [Iraq] are going to do.
"But if there is a shortage, we will make it good."
He said the cartel was primarily concerned with avoiding the volatile movements in prices that have beset oil markets over the past three years.
"Hopefully we will avoid a precipitous fall in the price or a precipitous rise in the price and that is what we are really trying to do," he said.
