Oct. 10 (Bloomberg) -- OPEC divisions could ``tear the organization apart'' as its biggest producer, Saudi Arabia, pursues a more moderate course than other members calling for supply cuts to revive oil prices, a London analyst said.

``Saudi Arabia has not joined the OPEC hawks, led by Venezuela and Iran, in calling for another supply cut, and we think we could be witnessing the beginning of the end for the organization,'' Neil McMahon, a London-based analyst at Sanford C. Bernstein & Co., wrote in a report today.

OPEC announced yesterday it would hold an extraordinary meeting on Nov. 18 as the worsening credit crunch threatens to restrain economic growth and curtail energy demand. Oil has slumped 47 percent from a July record to trade near $78 a barrel today.

OPEC President and Algerian Oil Minister Chakib Khelil and Shokri Ghanem, chairman of Libya's National Oil Corp., have both said OPEC needs to cut production to stem the price slump.

``As the only country likely to have any real influence on supply within OPEC in the near and longer term, the Saudis are the key to the future existence of OPEC,'' the report said.

``However, we do not necessarily think that Saudi wants to cut, as a falling oil price should contain the amount of demand destruction, and secondly if Saudi cuts its share, will the hawks actually cut theirs?,'' Bernstein said.

Without a concerted OPEC effort to reduce supply, prices are likely to drift to the marginal cost of $75 to $80 a barrel, or $60 to $70, when adjusting for a recession and lower service company costs, according to McMahon.

``Such an outcome would likely create an untenable situation within OPEC and the potential for the organization to cease to work as one body,'' he wrote.

To contact the reporter on this story: Stephen Voss in London at sev@bloomberg.net

Last Updated: October 10, 2008 14:00 EDT