Oil traders were bracing themselves for a further sharp drop in the price of crude today after Opec deferred a decision on fresh production curbs amid rifts among its members over adherence to existing agreed cuts in output.

Before agreeing to new restrictions, Gulf states, led by Saudi Arabia and Kuwait, were demanding proof that fellow members of the Organisation of Petroleum Exporting Countries were meeting their share of existing production cutbacks of two million barrels a day.

A further cut in Opec's crude output of one to 1.5 million barrels a day is still likely to be settled at the cartel's December 17 meeting. Ahead of that, however, this weekend Saudi Arabia was demanding full compliance with present quotas by all Opec members.

“We are very concerned about over-production,” Abdullah al-Attiyah, the Qatari Oil Minister, said.

Mohammad al-Olaim, the Kuwaiti Oil Minister, said: “Market conditions require us to be 100 per cent compliant.”

Delegates at Opec's weekend meeting in Cairo identified Iran and Venezuela, perennial price hawks who have urged steeper production cuts, as prime suspects over flouting production limits. Venezuela denied the charge, while Iran made no comment.

Data for Petrologistics, a consultancy, estimated that Iran's production would have fallen by 80,000 barrels a day last month, much less than the 199,000 barrels that it was due to cut.

Opec's priority for its next meeting will be to find a way to put a floor under the collapsing price of oil, which has tumbled by about $90 in recent weeks to about $55 a barrel as an emerging global recession has hit demand and led to traders betting on still further falls in the world's appetite for crude. World oil demand is expected to contract this year for the first time in 25 years.

In a landmark move, Saudi Arabia this weekend identified what it saw as a “fair price” for crude, at $75 a barrel - a level that analysts said for the moment was far beyond Opec's ability to deliver. Yet this goal will serve, nevertheless, as a key reference point for traders when crude demand begins to revive from its present, recession-driven slump. In the meantime, Saudi Arabia's price objective will set the stage for further output curbs as soon as next month.

“The bottom line is that they need to cut again and they need to cut substantially,” Gary Ross, chief executive of PIRA, an energy consultancy, said. “Demand is falling out from beneath them.”

Opec has a mixed record of dealing with downturns in the world economy that hit energy demand. In 2001, it successfully defended prices by removing five million barrels a day of production in four stages - 19 per cent of the cartel's supply - in a strategy that laid the foundation for a six-year long boom in the cost of crude, culminating in this summer's record $147 a barrel price. In 1997, however, Saudi Arabia pushed through a production increase at the start of the Asian financial crisis after Venezuela openly flouted its cartel supply quota by a large margin. As a result, prices went into a tailspin and the cost of US crude plunged to $10.35 a barrel at the end of 1998.

Ali al-Naimi, the Saudi Oil Minister, said at the weekend that oil prices needed to return to $75 a barrel to keep more expensive new extraction projects at the margins of world supply on track. “There is good logic for $75 a barrel,” he said. “You know why? Because I believe $75 a barrel 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.”

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