OPEC gears up for deep output cuts

By Barbara Lewis - Analysis

LONDON (Reuters) - OPEC members might have ignored output limits in the past, but they mean business now after oil prices shed more than half their value in three months and financial turmoil has crushed demand.

Most of the 11 members of the Organisation of the Petroleum Exporting Countries with set targets have said they were reducing output in line with a deal last month to take away 5 percent.

After the agreement at an emergency meeting oil prices sank below $62 a barrel, but have since recovered slightly.

"I think OPEC realises it has to show a very determined, united front in the first cut. If it does not, no-one is going to have any faith in future cuts," said Lawrence Eagles of JP Morgan.

Top exporter Saudi Arabia, which holds the key as the producer pumping most above its target, has yet to tell customers its intentions, but industry sources said it was about to do so.

"Everything depends on ... the decision of Saudi Arabia," OPEC President Chakib Khelil said at the weekend as he urged the kingdom to make a swift announcement.

After Saudi Arabia, Iran is the next biggest OPEC exporter and it has told customers they will receive less oil.

Even Nigeria, which has been forced by militant attacks to shut in production and is pumping below agreed limits, has said it will lower output in November and December by 5 percent.