Saudi Arabia this morning identified $75 a barrel as a fair price for oil, the first time in years the world's leading crude exporter has cited a price target.
Saudi Oil Minister Ali al-Naimi said oil prices needed to return to $75 to keep the more expensive new projects at the margins of world supply on track.
"There is a good logic for $75 a barrel," said Naimi. "You know why? Because I believe $75 is the price for the marginal producer. If the world needs supply from all sources, we need to protect the price for them. I think $75 is a fair price."
Naimi was speaking ahead of an OPEC meeting at 2 p.m. (Malta time) to review progess on cartel output restraints agreed in the past two months that aim to remove seven percent of its supply from the world market.
Ministers said they were likely to defer a further production cut until their meeting next month.
The Saudi comments are likely to come as a relief to major oil consumer countries hoping OPEC will not seek to push crude prices back towards $100 barrel during a recession.
Benchmark US crude closed at just over $54 a barrel yesterday having peaked at $147 in July.
The first priority for the Organisation of the Petroleum Exporting Countries is to prevent prices, hit hard by a slump in fuel demand in the West, falling any further.
OPEC's meeting today was expected to call for strict adherence to existing oil output curbs before considering further cuts when they meet next in Algeria on December 17.
"Compliance I think is OK," said Kuwaiti Oil Minister Mohammad al-Olaim. "But the market conditions require us to be 100 percent compliant."
Naimi said he would like to see inventory cover among OECD industrialised nations fall back to 52 days from current levels of 55-56 days of forward demand.
"Some of us cannot sell our crude," said OPEC President Chakib Khelil.
The deferral of tougher output restraints suggests Riyadh wants to be sure that others in the 12-member cartel are sharing the burden of the reductions.
Naimi said that Saudi Arabia's compliance with its share of the combined 2 million barrels a day (bpd) of cuts agreed in September and October was "very high".
But Saudi-owned al-Hayat newspaper quoted an OPEC source as saying that a lack of restraint by some countries was having a negative effect on oil prices.
"Compliance is less than we would like," said Shokri Ghanem, Libya's top oil official.
Evidence so far suggests good if not total adherence with last month's 1.5 million bpd cut effective from November 1, OPEC's biggest one-time cut since the world economy last faltered in 2001.
Tanker-tracking consultancy Petrologistics estimated last week that OPEC output would fall by 1.22 million bpd in November.
But the Petrologistics figures showed that nearly half of that reduction had been shouldered by Saudi Arabia, whereas Riyadh accounts for only a third of OPEC output.