LONDON -- Alarmed by a relentless slide in oil prices, OPEC members are likely to agree to cut production by as much as 1.4 million barrels a day when the cartel's delegates meet next week, an OPEC official said Monday.
Such a cut would be up to 400,000 barrels a day larger than the potential reduction called for in recent weeks by members of the Organization of Petroleum Exporting Countries.
OPEC members are considering cutting output by 1.2 million to 1.4 million barrels a day, or 5 percent to 6 percent of their official production, said the OPEC official, speaking on condition of anonymity from the group's headquarters in Vienna, Austria.
Earlier, OPEC Secretary-general Ali Rodriguez earlier told reporters that cuts of more than 1 million barrels a day were a ''possibility.'' Rodriguez, speaking in Kuala Lumpur, Malaysia, did not give the size of the possible cuts.
World crude prices have continued to weaken because of a sharp decrease in global economic activity, a slump compounded by the terror attacks on the United States.
On Friday, the price for OPEC's benchmark blend of seven crudes was $17.81 a barrel, down 30 percent from $25.56 a barrel on Sept. 10 -- the day before the attacks. OPEC had not yet compiled its benchmark price for Monday.
The price for December contracts of North Sea Brent crude slipped 33 cents to $19.44 a barrel on the International Petroleum Exchange in London. December contracts of light sweet crude fell 16 cents to $20.02 a barrel on the New York Mercantile Exchange after falling as low as $19.76.
Representatives of OPEC's 11 member nations plan to meet Nov. 14 to assess market conditions and set production policy. OPEC, which produces about 40 percent of the world's crude, has announced cuts in output three times this year already.
OPEC members Iraq, Venezuela and Qatar have taken the lead in calling for the group to curtail production further in hopes of buttressing prices. All three have called recently for an additional cut of 1 million barrels, or 4 percent of OPEC's official daily output of 23.2 million barrels.
For such a strategy to have the desired impact, however, non-OPEC suppliers such as Norway, Russia and Mexico would have to cut their output in a parallel fashion. So far, most have refused, meaning that they would gain market share at OPEC's expense if the cartel's members were to cut production on their own.
With demand softening, OPEC finds itself in ''a nightmare scenario,'' said Leo Drollas, chief economist at the London Center for Global Energy Studies.
Drollas noted that inventories of some oil products might even increase during the last quarter of this year -- a period that normally sees stocks decrease because of higher seasonal demand for heating oil and the crude oil used to produce it. He said a cut by OPEC members is almost inevitable.
It was not clear if such a cut would be made from OPEC's official output level or from its actual production. OPEC is currently pumping 700,000-800,000 barrels a day above its official quota, according to some energy analysts.
A cut of 1.2 million barrels from OPEC's actual output would therefore result in a net reduction of only 400,000-500,000 barrels a day.
Peninsula Clarion ©2015. All Rights Reserved.