Oil markets should brace for a surprise decision on output cuts when OPEC meets Dec. 17, the cartel's president said Saturday, suggesting that reductions could be deeper than expected.
"A consensus has formed for a significant reduction of production levels" by the 14-member Organization of Petroleum Exporting Countries, OPEC President Chakib Khelil told The Associated Press.
The OPEC head would not discuss how deep the output cut would be, but said it could be "severe," and noted that some analysts are predicting cuts of as much as 2 million barrels per day.
An output decision that startles markets would help bolster plunging oil rates, Khelil said.
"The best way is to surprise them," he said. "I hope it (the decision) will."
Oil prices settled at a four-year low on Friday of $40.81 a barrel.
In July, prices peaked at record highs above $140 a barrel.
OPEC previously announced a 1.5 million barrel-a-day reduction in October, but the decision failed to halt the fall in prices.
Markets have been expecting another cut at the Dec. 17 summit.
"The stronger the decision, the faster prices will pick up," Khelil said.
He urged oil producers outside OPEC to help the cartel regulate prices, especially Russia, which has said it could sign a cooperation memorandum with the cartel in the Algerian city of Oran.
"We hope that Russia will apply (quota decisions) ... as if it were an OPEC member," Khelil said.
He acknowledged the cartel has little control over prices at the moment because of the slumping world economy, which has considerably reduced demand for oil.
He pointed out that cartel nations only produce 40 percent of the world's oil.
"The probability that we can adjust supply to demand is very weak," he said. "In an unstable system, you react by trial and error."
He said fixing oil output levels has become "a kafkaesque situation" since OPEC wants to maintain its revenue stream without worsening the recession in the U.S. or Europe.
"I really don't think OPEC wants to hurt the world economy," he said.
Oil prices that remain too low would start hurting wealthy oil producers, he warned, adding to the global recession.
The International Monetary Fund and several stock markets have asked wealthy producers to reinvest some of the cash they piled up when oil was at over $100 per barrel.
If oil is sold at below production costs, oil-producing nations would have to end their investments abroad and could themselves enter a recession, Khelil warned.