OPEC may defer 3rd output cut, ministers say

By Luke Pachymuthu and Peg Mackey

CAIRO (Reuters) - OPEC ministers on Friday said they were likely to defer a decision on fresh output cuts until next month, despite an accelerating slump in fuel demand that has slashed the price of oil by two-thirds since July.

Caught off guard by a severe decline in energy consumption in the West, the Organization of the Petroleum Exporting Countries is wary of being seen to panic after two previous rounds of cuts since September failed to shore up prices.

Ministers arriving for Saturday's meeting said they were likely to delay another reduction until they meet again in Algeria in December, when they can better judge if all members have met previous commitments.

"It's a consultative meeting. We will prepare some more information and make a final decision maybe in Algeria," said Iranian Oil Minister Gholamhossein Nozari.

Prior to the meeting Venezuela, Iran and Iraq were calling for more aggressive restraints but by Friday only Iraq wanted an immediate cut.

"We support a production cut...we support a reduction now," said Iraqi Oil Minister Hussain Shahristani.

Powerless so far to prop up prices, delegates say OPEC is worried that another quick cut could undermine its credibility among traders focused on the spread of the financial crisis into the real economy and its impact on oil demand and inventories.

U.S. crude tumbled below $52 a barrel on Friday having set a record $147-a-barrel high in the summer. Prices are down 24 pct since OPEC's last meeting agreed a hefty cut in late October.