DOHA, Qatar (AP) – OPEC has more to consider at its emergency meeting here than whether to formalize a 1 million barrel per day output cut that has been rumored for almost two weeks.

How to divvy up the cut, if it is agreed upon, will be at the top of the agenda, with the opinion of No. 1 producer Saudi Arabia carrying the most weight. The goal of such a move would be to stem the recent 25 percent decline in oil prices, though energy traders will have the final say in assessing the market’s supply-demand balance.

“The details do matter to a substantial segment of investors and traders of oil. A production cut needs to be credible,” said Citigroup energy analyst Timothy Evans.

Indeed, the Organization of Petroleum Exporting Countries appears fractured on a variety of other matters, analysts said, ranging from what it considers to be a fair long-term price of oil, whether it will need to make further cuts early in 2007 and how much market share its various members should be allocated under the Vienna-based cartel’s production quota system.

“If they walk away from Doha with no agreement whatsoever, it will be because they’ve not been able to find common ground for how to get around this issue of allocation,” Evans said.

The last time OPEC cut production was December 2004, when oil traded slightly above $40 a barrel.

Oil prices traded Wednesday afternoon at $57.55 a barrel, a decline of $1.38 on the New York Mercantile Exchange.

OPEC price hawks such as Nigeria and Venezuela have vociferously advocated for a cartel-wide 1 million barrel a day production cut since the start of the month. But without an agreement to rein in production from Saudi Arabia, which remained conspicuously silent on the subject, the market took with a grain of salt Nigerian and Venezuelan pledges to get the ball rolling through voluntary cuts.

“In the much trumpeted run-up to the event, the loudest signal may be the silence of its most important member,” Fimat USA energy analyst Antoine Halff said. “The somewhat mixed messages about the meeting itself likely reflect even deeper divisions on substance, including price objectives and how to tackle the nearly impossible task of adjusting quotas.”

OPEC’s production quota stands at 28 million barrels a day, after being left alone at the group’s last meeting in September. Saudi Arabia is allocated nearly a third of that production.

But because several OPEC members, including Nigeria and Venezuela, have not been able to maintain production at the levels they have been allocated, the Saudis and others have had to pick up the slack (by exceeding their quotas) to meet rising global demand.

This is why divvying up any potential cuts has become controversial, analysts said.

“It puts most of the burden on Saudi shoulders,” Halff said, and “Riyadh has already trimmed output in recent months.”

To make matters thornier, Saudi Arabia is not as comfortable with very high prices as some others within OPEC, particularly those whose production is slipping and are therefore relying on higher prices simply to keep their countries’ oil revenues steady.

Saudi Arabia’s discomfort with soaring oil prices – crude futures surpassed $78 in July – is partly because of its close economic and political relationship with the United States, the world’s largest energy consumer. But Riyadh also has more pragmatic reasons to worry: high energy prices have caused a surge of investment among non-OPEC oil producers that is threatening the cartel’s global market share, and they have prompted worldwide interest in conservation and alternative fuels.

“In the short term, if you allow prices to drop, then that might make the competition think twice,” Evans said.

Because crude-oil inventory levels are healthy in the United States and Europe, and OPEC is forecasting diminishing demand for its crude, potential price increases were expected to be held in check after any output reduction.

Prices could fall further even if the group agrees to trim output. “Participants already expect an output cut after the meeting,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Many analysts believe that Saudi Arabia, and by default the rest of OPEC, is prepared to accept oil prices around the $55-a-barrel level. Whether the group can successfully manage its output to influence this target price is another matter altogether.

If economic growth slows and there is a relatively warm winter in the Northern Hemisphere, OPEC could be looking at further cuts early next year. On Wednesday, the group’s acting Secretary General Mohamed Barkindo told Dow Jones Newswires that rebounding non-OPEC suppply and moderating demand suggest a possible 2.5 million barrel a day oversupply by the second quarter of next year.

—