Dec. 16 (Bloomberg) -- Crude oil rose after Venezuela and Iran said OPEC may need to cut oil production by 2 million barrels a day at a meeting tomorrow in an effort to stop a slump in prices.

The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world’s oil, is ready to make a “big” cut in supplies when it meets tomorrow, Venezuelan Oil Minister Rafael Ramirez said today. Iran supports a reduction of 2 million barrels a day, a delegate from the country said. Russia, the world’s second biggest exporter, has signaled it may cut supplies as well.

“There is too much oil on the market right now,” said Johannes Benigni, chief executive officer at consultants JBC Energy GmbH in Vienna. “Whatever they do now, presumably more than a 2 million barrels a day cut, is going to help, but what helps the psychology is that Russia has also announced they may join in.”

Crude oil for January delivery rose as much as $1.18, or 2.7 percent, to $45.69 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $45.21 at 1:22 p.m. London time. Oil has tumbled 70 percent from a record $147.27 a barrel on July 11 as the deepening global recession cuts fuel demand.

OPEC members and other producers such as Russia are under increasing pressure to reduce supplies as oil’s $100 a barrel collapse cuts export revenue, creating budget shortfalls. World oil demand will fall this year for the first time since 1983 as the recession cuts fuel consumption, the International Energy Agency said last week.

‘Very Strong Decision’

OPEC is asking Russia, the largest oil exporter outside the group, to cut oil output by between 200,000 and 300,000 barrels a day to help revive prices, OAO Lukoil Chief Executive Officer Vagit Alekperov said in Moscow yesterday.

“We have to make a very strong decision,” Ramirez told reporters after arriving in Oran, Algeria, for tomorrow’s meeting. “What’s important is that there’s consensus to cut and that we have to make a big cut.”

The price slump spurred OPEC to cut output by 1.5 million barrels a day in October, the first reduction in two years. The group, which deferred a decision on further cuts at its Nov. 29 consultative meeting in Cairo, will probably lower output targets tomorrow by at least 2 million barrels a day, or 7.3 percent, according to 18 of 33 analysts surveyed by Bloomberg this week.

“Certainly the market is expecting a cut, and a big one,” said David Hufton, managing director of PVM Oil Associates Ltd. in London. “Expectations have been fuelled for a cut of at least 1.5 million barrels a day. Anything less than this will see prices fall further.”

Shrinking Demand

OPEC forecasts that demand will shrink next year, the group’s secretariat said in a monthly report today. World oil demand in 2009 will decline by 0.2 percent to 85.68 million barrels a day, it said. That’s 1 million barrels a day lower than forecast last month.

Brent oil for January settlement rose as much as $1.16, or 2.6 percent, to $45.76 a barrel on London’s ICE Futures Europe exchange. The contract expires today. The more actively traded February futures gained 1 percent to traded up 1.8 percent at $48.00 a barrel at 12:56 p.m. London time.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

Last Updated: December 16, 2008 08:33 EST