OPEC to debate compliance versus cuts

OPEC ministers will on Sunday debate whether their best policy is strict compliance with existing output curbs or a new set of cuts as they balance the issues of bulging oil stocks and a bruised world economy.

Ministers arriving in Vienna have said the first item on the agenda was tighter enforcement of agreements since September to lower supply targets by 4.2 million barrels per day (bpd).

"Compliance is very good," Saudi Arabian Oil Minister Ali al-Naimi told reporters. "We'd like to see compliance as high as possible. It is over 80 percent now, it can be better."

Naimi said the output cuts were reducing oversupply, but demand was expected to stay weak.

"You have to understand that the world economy is not as healthy as it should be. We should expect demand world-wide to be down."

OPEC's Ministerial Monitoring Committee, which will make a recommendation to Sunday's full meeting of the Organisation of the Petroleum Exporting Countries, was calling for better compliance, a delegate told Reuters.

"There was an emphasis on better compliance. This is what is going to be suggested tomorrow," the delegate said on Saturday.

Adding to pressure on OPEC to avoid inflicting further damage on the economy by driving oil prices higher, U.S. President Barack Obama, head of the world's biggest energy consumer, called Saudi King Abdullah on Friday.

But sources said some members of the 12-member producers' club still favoured more decisive action to drain inventories and avoid a further slide in the oil price as the fall in economic activity destroys fuel demand.

Algerian Energy and Mines Minister Chakib Khelil has been the only one to say so publicly since arriving in Vienna.

Asked whether OPEC should cut or just comply with existing restrictions, Khelil replied: "Both ... comply and cut."

He said the oil market had already factored in another reduction of at least 500,000 bpd, with the implication prices would fall if that does not happen.