Sept. 7 (Bloomberg) -- OPEC's Gulf-Arab members, which pump half of the group's oil, are likely to urge their colleagues to leave output unchanged when they meet this week as prices above $100 a barrel squeeze the global economy.

Saudi Arabia, the world's biggest producer and de facto leader of the 13-member Organization of Petroleum Exporting Countries, the United Arab Emirates, Qatar and Kuwait may reject calls from Venezuela and Iran to trim supplies at its Sept. 9 meeting in Vienna, according to 29 of the 32 energy analysts surveyed by Bloomberg.

Most OPEC members ``don't want to send prices skyrocketing by announcing a cut,'' said Mike Wittner, head of oil research at Societe Generale SA in London. OPEC ``probably doesn't want to see another run at $150.''

Producers may not act to stem oil's decline, down more than 25 percent from its record $147.27 on July 11, as global economic growth slows, denting demand for energy and ultimately reducing their income. The Gulf states have used the six-year commodity boom to try diversifying their economies into new industries such as tourism and finance, while contending with record inflation.

Oil declined $1.66 to $106.23 a barrel on Sept. 5 as the dollar halted a three-year slide against the euro and Hurricane Gustav caused almost no damage to drilling platforms and refineries in the Gulf of Mexico.

Blessing in Disguise

Falling oil prices and the simultaneous strengthening of the dollar may benefit Middle Eastern countries by sucking up excessive liquidity in the region, said Robert Mckinnon, Head of Research at Dubai's Al Mal Capital PSC.

``The stronger dollar is attracting liquidity out of the region, slowing down the economy, which is what people want to combat inflation,'' Mckinnon said. ``At $80-$90 a barrel, the region's economies are still fundamentally sound -- as long as oil remains above about $50 a barrel, most government budgets are in surplus.''

Inflation has accelerated to records across the Persian Gulf as oil-fueled economic growth creates shortages of housing and services, while the weaker U.S. dollar and higher global food prices make imports more expensive. Inflation in Saudi Arabia, the biggest economy in the Middle East, accelerated to a record 11.1 percent in July.

The six Gulf Arab states, which include non-OPEC Oman and Bahrain, earn a further $55 billion per year each time the oil price jumps $10 a barrel, Merrill Lynch & Co. said in July.

Gulf Markets Last Week

Persian Gulf stocks retreated last week on concern lower oil prices will dent government surpluses in the oil-rich region. Saudi Basic Industries Corp., the world's biggest chemicals maker by market value, and Industries Qatar led the decline.

``The drop in oil prices is concerning investors,'' Adel Waleed Nasr, local brokerage manager at United Securities LLC in Muscat, said in a phone interview. ``They are worried that oil may keep sliding and that the drop will weigh on government surpluses across the Gulf.''

All seven Persian Gulf stock indexes tracked by Bloomberg declined last week. Oman's Muscat Securities Market 30 Index slid 9.1 percent, its biggest weekly slump in at least five years. Saudi Arabia's Tadawul All Share Index dropped 4.4 percent, while measures in Kuwait and Dubai retreated 3.7 percent and 2.1 percent respectively.

Major events this week:

Sept. 9: The Organization of Petroleum Exporting Countries will hold its first conference since March. www.opec.org/home/

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.netAyesha Daya in Dubai adaya1@bloomberg.net

Last Updated: September 7, 2008 00:00 EDT