Oil ministers of the Organization of Petroleum Exporting Countries agreed in principle today to cut their total production by 1.5 million barrels in an effort to halt the slide in world oil prices.
The acting OPEC chairman, Indonesia's Subroto, told reporters that the ministers hoped to resolve in an overnight session the difficult question of how the cartel would divide the burden of the production cuts.
Saudi Arabia's Ahmed Zaki Yamani said earlier that all 13 members were persuaded that lower output was the only feasible option to defend OPEC's benchmark price of $29 a barrel.
Yamani said that among the member states only Nigeria declared that it could not afford to sacrifice any production now.
The OPEC ministers are staking their strategy on a belief that western oil consumption will rise considerably in the coming months as heating-oil use expands in winter and oil companies replenish their stocks.
OPEC members feared that the alternative option -- lowering the official price -- would trigger further rounds in a price war because members would become more desperate to sell more oil to make up for the lower income per barrel.
Subroto said a consensus was reached among the members that reducing OPEC's ouput ceiling temporarily to 16 million barrels would be sufficient to relieve downward pressure on oil prices. "We don't want to overdo it by a larger cut," he said.
Subroto stressed that the cuts were envisaged only as temporary action lasting "a couple of months until the spot market firms up to official prices."
Oil traders following the meeting here said they were skeptical about whether OPEC could defend the $29 price even if they agreed on how to apportion further cuts in output.
They said that bulging production among non-OPEC countries is likely to pick up any slack created by lower OPEC output.
Market analysts believe that the persistent oil surplus and curtailed consumption, for reasons such as conservation and the strong dollar, will inevitably force prices to fall in the future.
"The market is telling OPEC that the price is too high and must come down, but these countries refuse to listen," remarked a U.S. oil trader here.
As the wealthiest OPEC member, Saudi Arabia will be expected to carry the brunt of slashed production. But some reports have put Saudi Arabia's current output as low as 3.5 million barrels a day, leaving marginal room for further cuts.
Other countries that may be asked to make substantial reductions are the United Arab Emirates, Indonesia and Venezuela. All three countries are now pumping more oil than assigned by their individual quotas, oil industry analysts said.
Iranian Oil Minister Mohammed Gharazi insisted that his country has already made "big sacrifices" because of the four-year war with Iraq.
He claimed that Iran is now exporting only one-half of its 2.4 million barrel production quota because of continuing Iraqi air attacks on tankers seeking to load at Iran's main oil terminal at Kharg Island.
Gharazi said he agreed that OPEC must try to hold the world oil price at $29 a barrel but that this could only be accomplished if Saudi Arabia reduced its output "by very much."
Among the poorer OPEC members, Nigeria is considered the gravest hardship case because of the massive debts incurred by the previous regime and the widespread poverty among its 100 million citizens.
On Sunday, Nigeria's oil minister Tam David-West said the country's hard-pressed financial plight meant that any any cuts in production were "out of the question."
Nigeria broke ranks with the cartel nearly two weeks ago by cutting prices $2 a barrel to stay competitive with its non-OPEC rivals, Britain and Norway. David-West refused to commit himself on when Nigeria might be prepared to rejoin OPEC's price structure.
OPEC has tried to enlist the cooperation of outside producers in recent months in the hope of preventing further expansion of the global glut in oil supplies. Oil ministers from Mexico and Egypt, who are attending the current meeting as observers, have promised to help stabilize prices. But other non-OPEC countries have not committed themselves.
Oil industry analysts here say that if OPEC cuts production it is only a matter of time before other countries, such as Britain, Norway or the Soviet Union, the world's largest producer, seek to take advantage by stealing customers.
This, in turn, probably would compel some of the cartel's members to "cheat" by surpassing their quotas or offering secret price discounts, a phenomenon that has become increasingly common on the depressed world oil scene.
Subroto, implying that such tactics pose a serious problem to OPEC's survival, said one of the key items on the agenda was to "restore and strengthen discipline among OPEC's member countries so that all decisions are followed strictly."
In the past, OPEC has failed to control errant behavior by member states becaure there is no punitive or enforcement action that can be taken to discourage violations.
"We are entirely dependent on the sincerity of belief . . . that by acting together, our countries can best serve their long-term individual interests," a member of OPEC's Vienna-based Secretariat said.
Subroto said that once the new quotas were established, perhaps by Tuesday, the conference would broach the complicated matter of "price differentials," or the range of prices paid for different grades of OPEC oil.