ORAN, Algeria : OPEC and non-OPEC oil exporters took action on Wednesday that could remove up to 2.6 million barrels of oil from the market in a bold bid to boost prices and producers' incomes. The Saudi Arabian oil minister said the 13-nation OPEC cartel had agreed at a meeting here on an OPEC production cut of two million barrels a day, its largest ever and equivalent to about 7.0 percent of its current output quota of 27.3 million barrels a day. "There is a consensus on a cut of two million barrels a day," Saudi Arabian Oil Minister Ali al-Nuaimi told reporters as a meeting of the Organization of Petroleum Exporting Countries got underway. OPEC ministers called the meeting to block a steady slide in oil prices, which are now 70 percent off their high points of 147 dollars a barrel in July, as demand dries up in recession-hit industrialised consuming nations. Just before talks opened, non-members Russia, which is attending the meeting, and Azerbaijan said they were ready to cut their own oil production by about 300,000 barrels a day each. OPEC officials had earlier appealed to non-member producers to help them stabilise the market. OPEC Secretary General Abdalla Salem El-Badri said on Tuesday he wanted to see a cut of 500,000-600,000 barrels a day by non-members. "The Saudis are traditionally the moderates or 'doves' within the cartel and this call for so severe a cut is bad news for global consumers -- unless any higher prices ultimately lead to fresh exploration and drilling," said Cameron Hanover analyst Peter Beutel. "The big problem with a production cut of two million barrels per day or more is that it will mean that OPEC will have cut nearly four million bpd this year, an amount unparalleled in history," added Beutel. Global economic momentum since July, when oil rates were at their highest, has all but collapsed as financial sector turmoil, brought on the by US subprime mortgage crisis, spread to the broader economy. With some of the world's leading industrialised oil consumers -- notably the United States, Germany and Japan -- already in recession and others such as China experiencing sharp growth slowdowns, demand for crude has plunged taking prices with it. The Paris-based International Energy Agency has said it expects global oil demand to fall this year for the first time since 1983 and OPEC officials themselves have voiced deep concern about the world's dwindling appetite for their crude oil. The price fall is already placing significant financial strain on several OPEC producers -- Nigeria, Edcuador and Venezuela for example -- that are heavily dependent on oil exports. But OPEC's ability to influence prices ultimately depends on whether the market believes the group will actually limit its production. Its effectiveness is contingent on members obeying quota levels and when prices and revenues are falling there is a particular need for discipline. Some producers cheat at the expense of others by failing to implement cuts, thereby increasing their revenues. The main problem facing OPEC is that whatever steps it takes to reduce supply to shore up prices risks dampening demand further, and a decision to spark a rise in price could turn out to be counter to the cartel's best interests. "The last thing the world's consumers need is another advance in in oil prices," oil analysts Cameron Hanover said Wednesday. "Any artificial or engineered rise in prices will exacerbate and extend the economic slowdown." David Ernsberger of global energy information provider Platts warned that "if demand isn't somehow stimulated then all of these cuts are not going to help OPEC achieve what they really want to achieve," which is stopping the slide in prices. At the same time, the only factor that that would stimulate demand is lower prices, which OPEC resists, Ernsberger added. "They are desperate for demand to return but they are part of the problem, not part of the solution."

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