Vienna: Gulf oil producers led by Saudi Arabia looked set on Thursday to block any cut in OPEC output, ignoring calls from poorer members of the exporters` group for action to halt a slide in crude prices.
With markets sensing OPEC will keep its production unchanged despite huge global oversupply, the price of benchmark Brent crude oil fell $2 to a 50-month low under $76 a barrel.
"OPEC is unlikely to cut today," a Gulf delegate told Reuters shortly before ministers began one of their most closely-watched meetings in years in Vienna on Thursday. Another delegate agreed, although a third said the outcome was too difficult to predict.
OPEC ministers started a closed session shortly before 1000 GMT.
Wealthy Gulf states seem ready to ride out the weak prices that have hurt the likes of Venezuela and Iran - OPEC members which need output cuts to stabilise the market and ease pressure on their state budgets, but cannot afford to make any themselves.
On Wednesday, Saudi Oil Minister Ali al-Naimi and his United Arab Emirates counterpart, Suhail bin Mohammed al-Mazroui, said they expected the oil market to stabilise itself. A Gulf OPEC delegate told Reuters the Gulf producers had reached a consensus not to cut output.
Oil prices having sunk 30 percent since June due to a boom in U.S. production from shale deposits, coupled with slack demand caused by slower economic growth in China and Europe.
The Organization of the Petroleum Exporting Countries accounts for a third of global oil output. If it were to cut exports without similar action by its competitors, it would lose further market share, including to North American shale oil producers.
On the other hand, a decision to stick to existing output levels would effectively mean the start of a battle for market share, Iranian Oil Minister Bijan Zangeneh said.
The Saudis and other Gulf producers could withstand for some time such a battle that could drive down prices further, thanks to their large foreign currency. Members without such a cushion would find it much more difficult.
Kuwaiti Oil Minister Ali Saleh al-Omair said OPEC would have to accept any market price of oil, whether it were $60, $80 or $100 a barrel. Iraq`s oil minister, Adel Abdel Mehdi, said he saw a floor for oil prices at $65-70 per barrel.
A price war might make some future shale oil projects uncompetitive due to high production costs, easing competitive pressures on OPEC in the longer-term.
"We interpret this as Saudi Arabia selling the idea that oil prices in the short term need to go lower, with a floor set at $60 per barrel, in order to have more stability in years ahead at $80 plus," said Olivier Jakob from Petromatrix consultancy.
"In other words, it should be in the interest of OPEC to live with lower prices for a little while in order to slow down development projects in the United States," he added.
"SHALE DISASTER"
The North American shale boom has taken many at OPEC by surprise.
"The U.S. is producing in a very, very bad manner. Shale oil, I mean it is a disaster from the point of view of climate change and the environment," Venezuelan Foreign Minister Rafael Ramirez, who represents the country at OPEC, said on Thursday.
While several Gulf members said they sensed a degree of consensus and unity among OPEC, Ramirez and Algerian Oil Minister Youcef Yousfi said they would support an output cut.
Ramirez said he would back a reduction of as much as 5 percent, reducing OPEC`s output ceiling from 30 million barrels per day (bpd) to 28.5 million bpd - close to the group`s expectations for demand for its oil next year.
OPEC usually needs to agree decisions unanimously and the difference in views is likely to guarantee a prolonged debate.
