Dec. 1 (Bloomberg) -- OPEC, supplier of more than 40 percent of the world’s oil, will reduce crude production when it meets this month in Algeria and is confident Russia will join OPEC in restraining oil supply, the group’s Secretary General Abdalla el-Badri said.

“For sure there will be action” at the OPEC meeting in Oran, Algeria, on Dec. 17, el-Badri told reporters in Tehran today, declining to specify the amount of output that may be reduced. “Everybody is in favor of a cut in the Algeria meeting - we are all gearing toward a cut.”

Ministers from the Organization of Petroleum Exporting Countries postponed debate on a second cut in output in as many months during meetings in Cairo on Nov. 29. OPEC members said they would wait to gauge the effect of a 1.5 million-barrel cut agreed to on Oct. 24.

Crude oil for January delivery fell as much as $2.03, or 3.7 percent, to $52.40 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $52.45 a barrel at 4:15 p.m. in Singapore. New York oil futures have tumbled 64 percent from their July 11 record of $147.27 a barrel as the U.S., Europe and Japan headed for their first simultaneous recession since World War II.

$75 a Barrel

OPEC is likely to lower output further as it seeks oil at $75 a barrel, a price el-Badri said was a “reasonable” level at this time. “There is a consensus among ministers. They want to defend a reasonable price,” he added.

For the long-term, the group is looking at a price of $70 to $90 a barrel, from 1996 to 2030, he said. Ali al-Naimi, the oil minister of Saudi Arabia, OPEC’s largest exporter and its de facto leader, said in Cairo that $75 a barrel oil represents a “fair price” needed to support investment in new fields.

“Oil prices are very low and it is obvious that they have to do something to stabilize prices,” said Sintje Diek, an analyst at HSH Nordbank in Hamburg. “They have said they need prices in the range of $70-90 a barrel. They will cut oil production in December.”

Russia and Norway

El-Badri said he is confident Russia, the world’s second- largest producer after Saudi Arabia, will join OPEC in restraining oil supply after prices plunged.

“We told Russia that OPEC will take action to lower output, but the burden is heavy,” he said. “Mexico and Norway have a decline by themselves, but Russia promised to join OPEC in trying to solve the problem.”

El-Badri may visit Russia after the OPEC meeting, “and try and convince them that they should participate in this difficult decision,” he said. The country’s energy minister will attend the Oran meeting, El-Badri told reporters in Cairo on Nov. 29.

Norway, the world’s fifth-largest oil exporter that joined OPEC in cutting production a decade ago, won’t heed OPEC’s call this time around because the country is not in a position “that lends itself to limiting production,” Jon Evang, a spokesman for the Petroleum and Energy Ministry, said today.

Russia’s Deputy Prime Minister Igor Sechin joined OPEC’s September meeting in Vienna to forge closer ties with the producer group as the falling price of oil, its biggest export, constricted state revenues. Russia first sent an observer to an OPEC meeting in June 1998, after its economy was battered by a 43 percent plunge in oil prices in just eight months, and pledged to lower output alongside OPEC countries.

‘Slim Chance’

“If anything Russia is at least more likely to say they can help out because they are going to have falling production anyway,” Simon Wardell, energy research manager at Global Insight Inc. in London, said in a Bloomberg TV interview. “The question is, will they make deep and meaningful cuts and the chances of that are pretty slim.”

Slowing global growth means demand will be “much lower” than expected a month ago, OPEC said in a statement after the group’s meeting in Cairo. Another cut on Dec. 17 may not be needed if member states complied with 80 percent of the 1.5 million barrel-a-day reduction agreed in October, Al Hayat reported, citing Saudi Arabia’s Oil Minister Ali al-Naimi.

Forecasts from secondary sources suggest that OPEC members will meet 80 percent of the target output cut, el-Badri said today. The group didn’t make a cut in Cairo because there was no clear data available yet, “so we didn’t want to shoot in the dark.”

‘Cairo Downplayed’

“It feels as if Saudi Arabia is almost inviting market participants to push prices lower to pressure better OPEC compliance and some non-OPEC participation in the next round of cuts,” said Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix, in a research note today. “The Cairo meeting had been downplayed by OPEC but it did not even produce a common statement and provided no clear hint as to the next line of action.”

The International Energy Agency, an adviser to 28 oil- consuming nations, and OPEC cut their demand forecasts for a third month in November. Crude-oil supplies in the U.S., which consumes a quarter of the world’s oil, rose for a ninth week, the longest stretch since April 2005, the Energy Department said Nov. 26.

“The short-term outlook for oil is gloomy,” el-Badri said. “It is more likely that oil demand will continue to decrease next year.”

To contact the reporters on this story: Ladane Nasseri in Tehran at Ayesha Daya in Dubai at adaya1@bloomberg.net

Last Updated: December 1, 2008 08:12 EST