GENEVA -- Overproduction by OPEC has cost member nations $6 billion since March, but on the eve of their fall conference, oil ministers remain sharply at odds over how to reverse those losses.
With the average OPEC barrel of oil selling for just over $15, the Organization of Petroleum Exporting Countries cannot afford to leave the meeting without signatures and firm promises from the group's 12 members, oil experts and senior OPEC officials agree.
To try to cut oil production enough to spark a price rally while still satisfying demands by Kuwait, Iran and others for increases in output quotas is a delicate balancing act.
How many barrels will be designated in OPEC's fourth-quarter production pact is uncertain. But several oil ministers and senior delegates said yesterday that the cap should be set no higher than 24.5 million barrels a day -- about 200,000 barrels fewer than OPEC is pumping.
Oil Minister Abdullah bin Hamad Al-Attiyah of Qatar, a member of the four-person compliance committee, said he favored a ceiling of 24.2 million to 24.3 million barrels a day to give the market an extra lift.
OPEC is on the defensive, because the market has grown skeptical of promises to rein in production. Oil Minister Abdalla Salem El-Badri of Libya, another member of the compliance committee, said quota cheating has dumped an extra 200 million barrels of oil on the market in the past six months. That extra production, he asserted, has cost OPEC more than $6 billion in income.
Although OPEC needs to trim production to boost prices, the cartel would probably be better off setting a relatively high ceiling to accommodate Kuwait's demand for 400,000 to 500,000 more barrels a day and to allow Iran and Nigeria some of the extra production they seek, said Bahman Karbassioun, an oil consultant. Otherwise, he said, traders will not believe that the agreement will work.
"The higher the number gets, the chance of their cheating decreases," Mr. Karbassioun said.
Oil Minister Ali Al-Baghli of Kuwait said Kuwait would not back away from its demand for a much bigger share of the output.
"We are a special case," he said, referring to the financial losses Kuwait suffered after Iraq invaded and destroyed oil fields.
Iran has insisted that if Kuwait gains a higher production quota, it wants one that allows it to maintain its share of OPEC's output.
Industry sources largely blame Iran, which has been exceeding its quota by 300,000 to 400,000 barrels a day in recent months, for the price plunge.
Oil prices have dropped nearly 19 percent in the past 12 months. Prices have fallen 12.5 percent just in the past six months.
U.S. light crude for delivery in November settled at $17.57 a barrel yesterday, down 6 cents at the New York Mercantile Exchange.
OPEC must achieve two goals this week if it expects to boost prices, said one Persian Gulf delegate.
"We must have a credible and respected agreement, one that can be signed by all," he said. "Second, we must have as low a ceiling as possible in order to increase the price" -- preferably below 24.5 million barrels a day.