Libya Urges OPEC to Cut Output to Halt Price Decline

By Maher Chmaytelli

Oct. 7 (Bloomberg) -- OPEC, the producer of more than 40 percent of the world's oil, should cut output after crude fell 36 percent from its July record in the wake of the credit crisis, Libya's top energy official said today.

``With oil prices collapsing and international banks being routed, it's better to keep our oil underground,'' Shokri Ghanem, chairman of Libya's National Oil Corp., said in a telephone interview from Tripoli. He declined to say by how much OPEC should lower production.

Crude slid below $90 a barrel in New York yesterday for the first time since February on concern slower global economic growth will reduce demand for fuels. OPEC President Chakib Khelil promised ``appropriate measures'' to stabilize prices and Qatar said it's reducing output in line with official quotas.

The Organization of Petroleum Exporting Countries should meet before its next scheduled gathering on Dec. 17 in Oran, Algeria, to decide on an output cut, Ghanem said.

OPEC agreed at a meeting in Vienna on Sept. 9 to a total production limit for 11 members of 28.8 million barrels a day, unchanged from previous targets. OPEC Secretary-General Abdalla El-Badri said this meant the group would trim ``oversupply'' by about 500,000 barrels a day.

Libya wants OPEC to cut production further. The North African nation is abiding by its OPEC quota of 1.7 million barrels a day, Ghanem said.

Crude oil for November delivery rose for the first time in five days, gaining as much as 5.3 percent to $92.48 on the New York Mercantile Exchange. It traded at $92.46 as of 9:15 a.m. local time. Prices reached a record $147.27 on July 11.

Goldman Forecast

Arjun Murti, the Goldman Sachs Group Inc. analyst who predicted a crude ``super spike'' in March 2005, said in a report dated yesterday that a sustained rally in the oil price is unlikely because of concern demand will weaken.

Qatar is reducing oil production to return to its official target, the nation's oil minister Abdullah bin Hamad al-Attiyah said today in a telephone interview from Doha. Qatar was producing about 50,000 barrels a day above its last known quota in September, according to Bloomberg data.

Crude prices will continue to fall next year, Khelil said yesterday in Algiers. ``OPEC will take the appropriate measures at the next meeting to preserve stability in the international market,'' Khelil, who is also Algeria's oil minister, said.

OPEC members pumped an average 32.19 million barrels a day last month, down 425,000 barrels a day from August, as Iraq's and Iran's production fell, according to a Bloomberg News survey of oil companies, producers and analysts, released on Oct. 3.

To contact the reporter on this story: Maher Chmaytelli in Athens at mchmaytelli@bloomberg.net