Dec. 16 (Bloomberg) -- Saudi Arabia, the world’s largest oil exporter, said OPEC will cut production by about 2 million barrels a day at tomorrow’s meeting to curb oversupply as demand shrinks because of the global recession.

“To bring things in balance there will be a cut in production of about 2 million barrels,” Saudi Arabian Oil Minister Ali al-Naimi told reporters today after arriving in Oran on Algeria’s coast. Iran, Venezuela and Qatar all said they backed Saudi Arabia’s position.

The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world’s oil, is gathering for the fourth time in as many months after crude prices plunged more than $100 from July’s all-time high. Output targets for 11 members with quotas stand at 27.3 million barrels a day. Crude oil traded at $45.05 a barrel in New York today.

“This might backfire,” said Robert Laughlin, a senior broker at MF Global Ltd. in London. “OPEC is coming out so aggressively about what the outcome of the meeting is going to be,” and that “may downplay the impact of the decision tomorrow.”

World oil demand will fall 0.2 percent next year as the global recession cuts energy consumption, OPEC said today in a monthly report, scrapping a forecast for consumption growth. Europe’s manufacturing and service industries have contracted in December at the fastest pace in at least a decade, a survey today said.

‘Slowing Demand’

“OPEC is struggling to cut enough production to deal with slowing demand and not too much so that they are responsible for a further deepening of the recession,” Adam Sieminski, Deutsche Bank’s chief energy economist in Washington, said before al- Naimi’s comments.

Iranian Oil Minister Gholamhossein Nozari said he backs a 2 million barrel-a-day cut at tomorrow’s OPEC meeting. Nozari told reporters in Oran, Algeria, that he wants to see stockpiles return to their five-year average.

Nozari spoke after meeting with his counterparts from Kuwait and Nigeria. Those three comprise OPEC’s ministerial monitoring committee, which keep tabs on production levels and recommends a course of action to the full conference.

Russia, the largest producer outside OPEC, is attending tomorrow’s meeting and may act to help the group shore up prices. Russia sent OPEC a draft memorandum proposing “active information exchange” and “systemic cooperation,” the Energy Ministry said today.

Target Compliance

OPEC agreed in October to reduce production by 1.5 million barrels a day from Nov. 1 and has implemented 75 percent of the cut, the group’s president, Chakib Khelil, said yesterday. Compliance with output targets will be key to the success of cuts agreed tomorrow said John Sfakianakis, chief economist at Saudi British Bank in Riyadh.

“With such a cut, the onus lies on quota implementation more so now than before,” he said.

Saudi Arabia has cut production by 1.2 million barrels a day from its peak this summer, al-Naimi said today.

In its monthly report today, the OPEC secretariat said production from the 11 members with quotas was 27.937 million barrels a day in November, some 629,000 barrels a day above the official limit. That estimate cited an average of secondary sources, including analysts and new agencies.

‘Strong Decision’

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

Angola’s oil minister, Jose Maris Botelho de Vasconcelos said today members will cut oil production as much as 2 million barrels a day at this week’s meeting to get prices near $75 a barrel. Oil ministers from Algeria, Kuwait, Qatar and Libya have said this month they support a cut in production.

OPEC will probably lower output targets by at least 2 million barrels a day, or 7.3 percent, according to 18 of 33 analysts surveyed by Bloomberg. All those canvassed expected OPEC to make a cut.

Slumping oil prices have spurred OPEC to cut output for the first time in two years when it met in October. The group deferred a decision on further cuts at its last meeting on Nov. 29 in Cairo.

Qatari Energy Minister Abdullah bin Hamad al-Attiyah said an OPEC oil supply cut of 2 million barrels a day would be “reasonable” because “it fits the market.”

Tomorrow’s meeting will start with an opening session at 9:30 a.m. local time in the Sheraton Hotel in Oran, followed by a closed-door session at 11 a.m., a lunch with Algerian President Abdelaziz Bouteflika at 1 p.m., and a further closed- door session later in the afternoon. A press conference is tentatively scheduled for 4 p.m. local time.

To contact the reporters on this story: Maher Chmaytelli in Oran, Algeria at mchmaytelli@bloomberg.net; Ayesha Daya in Oran, Algeria at adaya1@bloomberg.net.

Last Updated: December 16, 2008 13:24 EST