Opec haggling over the finer points of a deal to cut around 1 million barrels from daily oil supply is holding up a formal announcement, costing the group credibility and pressuring the oil price.
The elements are in place to tackle Opec 's concerns over brimming global fuel stockpiles, slowing economic growth in top consumer the United States and a steep drop in the requirement for its oil next year.
In fact, Opec producers are already cutting nearly half the million barrels per day (bpd) proposed. "The market is awaiting definitive word from Opec," said Mike Wittner of Calyon investment bank. "Until Opec gets its act together, they run the risk of the market testing their resolve and prices drifting lower."
US oil fell towards $59, down 23 percent from a July peak of $78.40, as investors doubt the exporter group that controls more than a third of the world's oil will make good on cuts.
The main stumbling block appears to be whether to make a reduction - the group's first since April 2004 - from Opec 's notional 28 million bpd production ceiling or from actual supply of nearer 27.5 million bpd in September. "The disagreement is over (whether cuts should come from) the quota or the production level," Kuwaiti Oil Minister Ali al-Jarrah al-Sabah said on Monday.
The dispute is significant because a cut from actual output would involve all members, even those - such as Venezuela, Iran, Nigeria and Indonesia - struggling to pump their full entitlement under official quotas.
Leading Opec producer Saudi Arabia and its Gulf neighbours Kuwait and the United Arab Emirates have ramped up and overshot their formal limits to ensure the world's growing demand for fuel has been met.
"It's not just as simple as cutting a million," an Opec official in Vienna said on Tuesday. "Ministers have different opinions and they are discussing how to cut a million." Nigeria and Venezuela last month announced unilateral supply curbs totalling 170,000 bpd.
And on Monday, top world exporter Saudi Arabia informed its customers they would receive less oil in November. A senior Opec delegate said Riyadh would cut about 300,000 bpd. According to Opec President Edmund Daukoru, who is Nigeria's Minister of State for Petroleum, Algeria, Kuwait and Libya have also already turned down the taps.
CALL A MEETING? Oil dealers say the Organisation of the Petroleum Exporting Countries will have to cut by more than 1 million bpd from its official ceiling if it wants to support prices.
The head of the US Energy Information Administration said on Tuesday that a cut of that size would boost prices, but the impact would be softened by high fuel stockpiles.
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