OPEC May Leave Supply Cuts Decision to Dec. Meeting

OPEC could leave a decision on cutting oil supplies until December, but is likely to give the market early warning at a meeting later this month in Cairo.

So far, the Organization of the Petroleum Exporting Countries (OPEC) has not called a full-blown policy meeting in Egypt at the end of the month.

But ministers will meet informally on the sidelines of an annual gathering of Arab oil ministers on Nov.29.

"The Cairo meeting's to signal that OPEC is concerned about the continuous decline in the price of oil," said an OPEC delegate on Monday. "This meeting will just be consultations about the low oil price -- it's still too early to make a decision on another cut."

The delegate echoed comment by OPEC President Chakib Khelil on Sunday who said Cairo would be a brainstorming session to formulate recommendations for another meeting scheduled to take place in Algeria on Dec.17.

More time was needed to see whether around 2 million barrels per day of supply cuts agreed by the producer group since September would take oil to a preferred price range of $70-$90 a barrel, Khelil said.

The group has avoided officially naming a target price, but some in the group have said privately around $70 a barrel is a level that allows both producer and consumer needs to be met.

OPEC could upgrade the Cairo talks to a full policy discussion at any time, and may take that decision if the oil price continued to slide.

Steep Drop

Oil has dropped by more than 60 percent from its July peak above $147 to a low last week of less than $55 as the economic slowdown has eaten into the oil demand of big consuming nations.

"I don't think oil ministers will come all this way just for a brainstorming meeting," said one OPEC source on Monday."I think they will cut something like 1 million to 2 million bpd."

But another OPEC insider was less certain there was a need for another policy round so close to the next scheduled meeting in December.

"I'm not sure if a full OPEC meeting will transpire," the source said. "We're just a month away now from our next meeting."

Iran's OPEC governor said on Monday a supply cut would be made if warranted and that it expected all OPEC ministers to attend.

Iran, which needs a higher oil price to balance its budget than core Gulf OPEC members, has said it wants OPEC to agree a cut of 1 million to 1.5 million bpd.

Some non-Arab OPEC members have yet to confirm their ministers will be in Cairo.

The OPEC talks will be on the sidelines of a ministerial meeting of the Organization of Arab Petroleum Exporting Countries (OAPEC).

OAPEC, unlike the similarly named OPEC, does not set oil production policy for its member countries.

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