OPEC chief urges producers to cut oil supply

OPEC oil producers will cut oil supplies when they meet next week in Vienna and "the reduction must be significant," the group President Chakib Khelil was quoted as saying on Saturday.

"There will be a reduction of the output and the reduction must be significant to restore the balance between supply and demand," Algerian state news agency APS quoted Khelil as telling reporters.

The Organization of the Petroleum Exporting Countries will hold an emergency meeting on Oct. 24 in Vienna to discuss the impact of economic weakness on oil markets.

Pressure is mounting within OPEC to reduce supplies as oil prices have fallen more than 50 percent from July's record of $147.27 and expectations have grown that a global recession will erode fuel demand.

"If the cut is 1.5 million barrels per day, then it will be 1.5 million barrels. If it is 2.0 million barrels per day, it will be 2.0 million barrels per day," added Khelil, who is also Algeria's energy and mining minister.

Earlier, Khelil was quoted in Saturday's edition of Algerian daily al-Watan as saying that OPEC saw oil prices bottoming at $70-$90 per barrel.

Market prices

"Normally, OPEC has no price target. The market decides on prices. But people say that the bottom price, the bottom cost below which we cannot step down, is between $70 and $90 per barrel," al-Watan quoted Khelil as telling reporters.

He cited cases of Canada and Brazil, where oil could not be pumped if prices were to fall below $70 per barrel.

On Friday, Khelil told Algerian state radio a "decision will be taken to lower oil supply by some OPEC members so that the oil price will not be damaged.

"This decision will not be implemented immediately because there are contracts, but will probably be implemented 40 days after it the decision is taken."

He did not say which countries were likely to cut supplies.

Iran wants higher oil prices and seeks to create balance in the market between supply and demand, Oil Minister Gholamhossein Nozari said in remarks published on Saturday ahead of next week's OPEC meeting.

"Balance should be established between oil demand and supply. In addition to stabilizing the oil price, we intend to increase its price," Nozari said in comments carried by the state broadcaster's website.

Reduction of supply

Pressure is mounting within OPEC to reduce supplies. Nozari has said Iran, OPEC's second biggest producer after Saudi Arabia, would seek an output cut at the cartel's next meeting. That gathering was brought forward from November.

Economists say Iran has become increasingly dependent on high oil prices; some saying it now needs $70 to $75 a barrel for its crude to balance its books. Iranian crude tends to trade at a discount to international benchmarks.

Iran's central bank chief Mahmoud Bahmani was quoted earlier as saying that Tehran should ban imports of luxury and non-essential goods given falls in crude oil prices. The statement published by the Jahan-e Eqtesad daily on Saturday signifies that the OPEC producer is concerned about sliding oil income.

Officials say Iran's international isolation means it is more immune than others to the world financial crisis but the governor's remarks reflect growing concern about one consequence of the turmoil -- tumbling oil prices.

Oil has tumbled to half the record of $147 a barrel set in July, with U.S. crude trading at about $72. Iranian crudes tend to sell at a discount to the U.S. benchmark, which means prices are close to or below levels some estimate Iran needs.

Another central bank official this month said the oil price slide rang an "alarm bell".