OIL prices hovered above Wednesday's 16-month lows yesterday as traders gambled on the world's oil-rich nations ordering a cut in production.
The Organisation of the Petroleum Exporting Countries (Opec), a cartel of 12 of the world's largest oil exporters, is holding an emergency meeting in Vienna today, with some members, led by Iran, calling for a cut in production to stem tumbling prices.
Since peaking at $147 a barrel in July, the price of crude oil has more than halved, falling to the lowest level in more than 16 months on Wednesday at just over $66 a barrel. Yesterday, crude oil in New York added around $2 a barrel to $68.82, but remains at half of the record summer peak.
Opec, which was formed to protect the interests of the major exporters, brought forward its scheduled meeting from next month and is expected to order a cut in overall production.
Iranian oil minister Gholamhossein Nozari said yesterday that production should be cut by two million barrels a day, to "stabilise the market and give good incentives for investors".
But the cartel is divided. Nigeria's oil minister Odein Ajumogobia said the country would be "comfortable" with oil at $80 a barrel and said it needed money to finance its budget.
"We know what Nigeria's interests are. We want to be able to meet our budgetary requirements for 2009," he said.
Saudi Arabia has resolutely refused to make its intentions clear. Arriving in Vienna yesterday, Saudi oil minister Ali al- Nuaimi refused to say whether world's largest oil producer supported restricting supply. He commented: "Who said anything about a cut?"
Western leaders oppose a cut, with Prime Minister Gordon Brown describing such a move "scandalous" given the current economic climate.
Opec produces 40 per cent of the world's oil. Its official output quota stands at 28.8 million barrels a day, however the actual figure is believed to be higher.