VIENNA -– OPEC's president said the oil cartel will lower output at an urgent meeting on Friday as hardline members pushed for sharp cuts despite warnings that a resulting price rise could worsen economic hardship.
"We are going to reduce" output, Chekib Khelil said Thursday, adding: "It's a concern that we could make the financial crisis worse by taking too strong a reduction."
He said he did not know how big a cut would be made. Iran and Libya both called for a reduction of two million barrels per day, while Venezuela said there should be a cut of at least one million barrels.
In any case, the decision "should not impact the world economy which is already in pretty bad shape," Khelil, who is also the energy minister of OPEC member Algeria, told reporters in Vienna.
British Prime Minister Gordon Brown recently said that any reduction made in a bid to push up oil prices would be "scandalous" at a time when major economies are close to recession.
The price of New York oil dived Thursday to a 16-month low, as recession fears stoked concerns about falling crude demand, traders said.
New York's main contract, light sweet crude for December delivery, sank as low as 65.90 dollars per barrel -- a level last seen on June 13, 2007 -- before rebounding to 69.05 dollars on the prospect of a cut in output.
Crude futures in New York and London have plunged by more than half from record highs of above 147 dollars a barrel reached only three months ago when supply concerns sent prices soaring.
"The market focus (on Friday) will be on the OPEC emergency meeting," said analysts at Barclays Capital in London.
Khelil's observation on Wednesday that stocks were very high and some exporters were having trouble shifting their crude indicated "the inevitability of a substantial cut," they said.
The Organization of Petroleum Exporting Countries produces 40 percent of the world's oil and its official output quota stands at 28.8 million barrels per day.
Saudi Oil Minister Ali al-Nuaimi refused to be drawn on talk of a scaling-back of output as he arrived in the Austrian capital on Thursday.
However Libya's Oil Minister Shukri Ghanem told reporters that "a huge cut" of "two million barrels" was required to create a balance between supply and demand.
Venezuelan Energy Minister Rafael Ramirez said there should be a cut of at least one million barrels. Ramirez added that he believed there was a consensus among OPEC's 12 members for a cut.
OPEC's Gulf state members led by Saudi Arabia, the world's biggest oil exporter, are expected to oppose a reduction of more than one million barrels, analysts said on Thursday.
Kuwait's Oil Minister Mohammad al-Olaim said OPEC must take the global financial crisis into account when deciding its action.
"There is a surplus in the market... and sooner or later action should be taken anyway," Olaim told reporters before leaving for Vienna.
"(But) we are concerned about the financial crisis going on and I think any action should take into consideration the financial crisis."
Recent figures for US oil reserves highlighted a sharp slowdown in demand in the world's biggest energy consumer.
"Analysts are now estimating that OPEC would need to cut its output by more than 1.0 million barrels per day in order to reverse the recent (price) losses," said BetOnMarkets analyst David Evans.
Friday's meeting on the impact of the financial turmoil and looming recession on the oil market was originally planned for November 18 but was brought forward as prices plunged.
OPEC has 12 members: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. A 13th, Indonesia, has suspended membership.