The cut is aimed at halting a precipitous fall in prices and sending a message of intent to the world market.
The ministers are aware their failure to speak with one voice in the two weeks leading up to the hastily convened talks on Thursday has contributed to a continuing slide in oil to $58 a barrel for US crude, 26 per cent below its mid-July peak and near its lowest level this year.
There is agreement in Opec it must reduce production by roughly one million barrels daily, or 3.6 per cent, to counter slowing demand for its oil and high fuel stocks, especially in top consumer the United States.
But as ministers arrived in Doha on Wednesday it remained unclear where the group that pumps over a third of the world’s oil would apply the knife – to actual output, averaged over 3 or 12 months, or notional quotas that have little relation to barrels pumped.
“We have to send a message to the market,” Abdullah al-Attiyah, the Qatari oil minister, told reporters. “Demand is very slow and…stock levels are very high.”
Iran and Venezuela, struggling to meet their quotas, are wary of a cut based on actual supply that would see them ceding market share to other producers, delegates have said.
But most in Opec say a reduction must come from real output to be credible and some argue a reduction of more than one million bpd is needed.
“Some members that are more hawkish want more than the million cut,” Ali al-Jarrah al-Sabah, the Kuwaiti oil minister, said. “They feel one million may not have any impact on prices.”
Some analysts shared that view.
“I don’t think there’s going to be a huge immediate impact on prices because the news has… already been priced in, unless they do something totally unexpected,” said Tetsu Emori, chief commodities strategist with Japan’s Mitsui Bussan Futures.
To try to sidestep the issue of quotas Opec may present the cuts as voluntary or temporary – releasing only a list of individual cutbacks, Attiyah said.
Some ministers say sooner or later the group may have to remove more crude from oversupplied markets.
That decision could fall at Opec’s next meeting in Nigeria on December 14, the head of Libya’s delegation Shokri Ghanem said.
Now is a delicate time for Opec to rein in production with oil prices still at historically high levels and consumer nations worried about the impact on their economies.
Strong demand from the US and China’s fast-growing economy sparked the rally. Real or feared supply disruptions in Iraq, Iran and Nigeria added fuel. But prices have gone into reverse since hitting a record high in July.
Analyst John Hall of John Hall Associates said Opec had missed a window of opportunity to rebalance the 85 million bpd world oil market and shore up prices at its September meeting.
“The difficulty they have is that it’s too late to do anything. It’s too late and not decisive enough,” he said.
“The world is awash with crude and awash with gas. I can’t see what Opec can do in the short term to get prices back up.”
Another analyst said some Opec policymakers wanted to make deeper cuts in output but felt hamstrung by mid-term elections in the United States, where fuel prices are a political issue.
“If it weren’t for the US election and the high prices we’ve had there would be a better than 50 per cent chance that Opec would cut more than a million barrels,” he said.
Opec’s official ceiling has been at 28 million bpd since July 2005. During that time output has shifted around 500,000 bpd either side of the official limit.
Most member countries have been pumping at – if not well beyond – their quotas for more than a year. But Indonesia and Venezuela have fallen well below theirs and Iran has had difficulty matching its limit due to declines in capacity.