Oct. 22 (Bloomberg) -- The oil market is ``flooded'' with crude and an OPEC output cut of 1 million barrels a day won't be sufficient, Libya's top oil official said.

``We are in agreement that the market is flooded and oversupplied,'' Shokri Ghanem, chairman of Libya's National Oil Corp., said today in a telephone interview from Tripoli.

The Organization of Petroleum Exporting Countries, which pumps more than 40 percent of the world's oil, may decide to lower production by 1 million barrels a day when it meets on Oct. 24 in Vienna, according to a Bloomberg survey of analysts. That won't be enough because demand has fallen and supply has increased, according to Ghanem.

``The fact that we agreed to meet is an indication that there are no differences of opinion about the state of the market and that we need to do something about it,'' he said. ``There is a specific measure to correct the market.''

Iran's energy minister, Gholamhossein Nozari, said yesterday OPEC may slash output quotas by 2.5 million barrels a day, or 8.7 percent, an amount about equal to what's pumped from Kuwait. The Algerian minister and OPEC president, Chakib Khelil, said two days earlier the reduction may be only 1 million barrels.

OPEC Debate

The debate pits Saudi Arabia, OPEC's biggest producer and a U.S. ally, against Venezuela and Iran, two nations that oppose U.S. foreign policy and advocate higher oil costs. Crude has plunged 53 percent from its July record of $147.27 a barrel on the New York Mercantile Exchange.

Saudi Arabia needs oil prices of less than $30 a barrel to balance its government budget, according to Merrill Lynch & Co. estimates. The United Arab Emirates requires $40 a barrel and Qatar $55.

Iran, with double the population of Saudi Arabia, has a breakeven point of about $100 a barrel, according to Edward Morse, managing director and chief economist at Louis Capital Markets LP in New York. In Venezuela, where President Hugo Chavez's government is spending oil revenue on social programs, the figure is about $120, he said.

To contact the reporter on this story: Emad Mekay in London at emekay@bloomberg.net

Last Updated: October 22, 2008 09:11 EDT