Gulf ministers said they wanted to see strict compliance with two recent output curbs before considering further reductions when the Organization of the Petroleum Exporting Countries meets next in Algeria on Dec. 17.

“Compliance I think is OK,” said Kuwaiti Oil Minister Mohammad al-Olaim. “But the market conditions require us to be 100 percent compliant.”

While OPEC’s first priority is to put a floor under a near-US$100 collapse in oil prices to US$55, Saudi Arabia for the first time in years identified a “fair” price — US$75 a barrel.

“There is a good logic for US$75 a barrel,” said Saudi Oil Minister Ali al-Naimi.

“You know why? Because I believe US$75 is the price for the marginal producer. If the world needs supply from all sources, we need to protect the price for them. I think US$75 is a fair price.” That target will serve as a reference point for traders when world oil demand starts to emerge from the current recessionary slump.

But for now, the oil market is focused on whether OPEC can prevent prices falling further and avoid the sort of divisions that have driven prices lower during economic downturns.

“US$75 a barrel doesn’t look doable in the short term,” said analyst Raja Kiwan of PFC Energy. “Given the fractious nature of OPEC on quota compliance, they may have some problems.”

Delegates said Riyadh and its Gulf neighbors Kuwait and the United Arab Emirates wanted to be sure others in the 12-member cartel were sharing the burden of the reductions before committing to further restraints.

One delegate identified Iran’s efforts as a particular source of concern.

Naimi said that Saudi Arabia’s compliance with its share of the combined 2 million barrels a day (bpd) of cuts agreed in September and October was “very high”.

Saudi-owned al-Hayat newspaper quoted an OPEC source as blaming a lack of restraint by some other countries for having “a negative effect on oil prices.”

OPEC may need to make larger cuts to balance the decline in demand among Western economies that has caused inventories to swell.

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