Opec homes in on 30 million bpd oil target deal

Opec on Monday targeted a new 30-million barrel-a-day production deal aimed at healing the rift left by a bad-tempered failure to reach an output agreement when it last met in June.

At stake for the Organisation of the Petroleum Exporting Countries when it meets on Wednesday is a credible policy going into a year when a sluggish global economy could undermine fuel demand and send oil prices tumbling from over $107 a barrel now.

"I think they have to agree this time because they need to be credible," said former Algerian Oil Minister Chakib Khelil.

If Opec finds itself "battling a potential price collapse next year," said Washington consultancy PFC, "establishing the basis for this cohesion will be Opec's first order of business."

Without a collective supply target, Opec members with spare capacity - Saudi Arabia and its Gulf Arab allies - remain free to pump at will.

Signs are that a deal is in the works.

A sherpa meeting of Opec experts on Monday discussed a report from Opec headquarters that forecasts demand for its crude at 30 million bpd, in line with current output, in the first half of 2012.

"I think there's a gentleman's agreement. The ongoing production won't be increased or decreased," an Iranian delegate told Reuters after the experts' meeting.

"30 million is the number we're looking at, yes," said a Gulf Arab Opec delegate. "We can't do less than that because prices would go up and we can't afford to let that happen," said another.

Leading producer Saudi Arabia has made clear it wants to keep oil prices under control to help nurture a recovery in economic growth. It announced last week it was pumping 10 million barrels daily of crude, much more than estimated by many in the oil industry.

Arriving in Vienna Naimi said the extra oil was "because of demand, demand from all over."

That Saudi is pumping at its highest for decades has pleased consumer nations worried about the impact of high oil prices on global growth.

"OECD stock levels are at historically low levels, plus we are in very fragile economic recovery situation," said Fatih Birol, chief economist at the International Energy Agency.

The Saudi position has worried price hawks in Opec like Iran, Algeria and Venezuela who want to keep oil above $100.

Iran is expected to seek a commitment from Saudi Arabia to cut back to accommodate the restoration of Libyan supply.

"Should Opec's present output continue, with the increased production of Libya and Iraq next year we would witness an increase in stockpiling and a drop in crude oil prices," said Iran's Opec representative Mohammad Ali Khatibi.

As holder of Opec's rotating presidency, Tehran looks willing to agree an output target so as not to end the year with a second failed meeting under its chairmanship.

Iran's new oil minister Rostam Qasemi told Reuters last week that producers should follow the technical guidance from Opec's Vienna secretariat.

The secretariat's 30-million-bpd forecast includes an allowance for stocks to rebuild in the second quarter when global fuel demand is at its lowest. Inventories among OECD countries currently are at about 55 days of forward demand compared to 61 days in the spring.

Not allowing for stock changes, the secretariat puts demand for Opec crude at 29.9 million bpd in the first quarter and 28.7 million bpd in the second quarter.

Ministers are not expected to tackle the tricky issue of individual country quotas. Those who have seen their market share decline since allocations were last aqreed in 2008 are reluctant to validate the losses.