Sept. 19 (Bloomberg) -- The Organization of Petroleum Exporting Countries may link a new price target for oil to the rising cost of producing crude in its member states, said Mohammed Barkindo, OPEC's acting secretary general.

``We are looking at the current price regime within the context of our rising costs,'' Barkindo told reporters at a conference in Riyadh, Saudi Arabia, today. ``The issue of rising costs of funding production, whether offshore, onshore, upstream and downstream, have sky-rocketed in the past several years.''

The 11-member group left its output target of 28 million barrels a day unchanged at this month's meeting even though prices had retreated by 18 percent from a July 14 record of $78.40 a barrel in New York. OPEC previously operated with a price range target of $22 to $28 a barrel before the March 2003 U.S.-led invasion of Iraq.

Producers in the Middle East including Saudi Arabia, the world's largest oil exporter, are concerned prices may fall after committing to invest $94 billion to boost their oil and gas industries to keep pace with rising world demand.

``A price close to $60 a barrel level would be when OPEC could be expected to take some oil off the market,'' Kevin Norrish, an energy analyst at Barclays Capital in London said in a phone interview today.

Cost of Rigs

The cost of building plants and pipelines, and hiring rigs to produce oil has climbed at a faster rate than demand for crude, Qatar's Oil Minister, Abdullah bin Hamad al-Attiyah said in June. Oil and gas drilling rigs cost about $140,000 a day to rent in the Persian Gulf, compared to $30,000 a day in the late 1990s, he said on June 7.

OPEC cut its outlook for fourth-quarter world demand to 85.6 million barrels a day, down 300,000 barrels a day from its previous forecast a month ago. OPEC also reduced demand forecasts for the current quarter, and for 2007, according to an e-mailed monthly report today.

Rising demand for crude worldwide over the last 3 years, that's expected to increase by a further 1.5 percent in 2007, has led OPEC to abandon its previous price target range.

``We don't have an official floor at the moment but clearly we are watching and considering the deterioration of prices, particularly the OPEC basket,'' Barkindo said. OPEC's oil basket, a blend of crude oils its members produce, fell 7.8 percent last month.

OPEC Shipments

OPEC's shipments of crude oil will fall 0.8 percent in the month to Sept. 30 from the preceding four weeks as refiners curb imports during maintenance work, according to consulting company Oil Movements.

The exporting group will load 25.1 million barrels a day onto tankers in the period, down from 25.3 million barrels a day in the four weeks ended Sept. 2, the Halifax, England-based company said in a report Sept. 14. Shipments are up 2 percent from a year ago.

Concern that slowing economies among the industrialized nations of the Organization for Economic Cooperation and Development and in Asia may drive down prices could prompt an emergency meeting of OPEC's ministers before its next schedules quota setting session in December, Barkindo said.

Algeria's Oil Minister Chakib Khelil, said in an interview on Sept. 12 that OPEC left production unchanged at its last meeting because its members were concerned that a cut in output ``may precipitate economic recession'' in the U.S., the world's largest consumer.

Iran

Iran's oil minister, Kazem Vaziri-Hamaneh, said he would call for an emergency OPEC meeting to review output ceilings if crude fell below $60 a barrel.

Crude oil for October delivery fell as much as 29 cents, or 0.5 percent, to $63.51 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract traded at $63.55 at 10:33 a.m. in London.

To contact the reporters on this story: Abdulla Fardan in Riyadh through the Dubai newsroom at

Andy Critchlow in Dubai at at acritchlow1@bloomberg.net

Last Updated: September 19, 2006 09:11 EDT