* OPEC members split over who should cut output and by how
* Saudis pressing Iran and Iraq to cut output
* OPEC papers propose 1.2 mln bpd cut from Oct levels
* Non-OPEC member Russia not participating in talks
* Asian OPEC buyers eye alternatives if OPEC cuts output
(Updates with API inventory data)
By Scott DiSavino
NEW YORK, Nov 29 Oil slumped by roughly 4
percent on Tuesday as OPEC's leading oil exporters struggled to
agree on a deal to cut production to reduce global oversupply
and boost prices, with Iran and Iraq at loggerheads with Saudi
Arabia a day ahead of meeting.
Brent futures fell $1.86, or 3.9 percent, to settle
at $46.38 a barrel, while U.S. crude lost $1.85, or 3.9
percent, to $45.23. That was the biggest daily percentage
decline for Brent since September.
Those declines put both global benchmarks on track to fall
for a second month in a row, with U.S. crude down around 3
percent and Brent down almost 4 percent.
Most analysts believe the Organization of the Petroleum
Exporting Countries will cobble together a deal to cut some
production at its meeting on Wednesday in Vienna, which starts
at 1000 GMT (5 a.m. ET).
But Iran and Iraq, OPEC's second- and third-largest
producers, have resisted pressure from the group's de facto
leader Saudi Arabia to curtail their oil output, making an
"Iran and Iraq are refusing to cut...simply reaching the
high end of the Algiers range will require greater cuts from
other members, namely Saudi Arabia, which may be difficult
politically," Morgan Stanley analysts said in a report, noting
the bank was still biased towards OPEC reaching a deal.
Documents prepared for the meeting propose OPEC cut
production by 1.2 million barrels per day from October levels, a
source familiar with the talks said, slightly more than the 1
million bpd the group discussed at a meeting in September. OPEC
produced around 33.82 million bpd in October.
Macquarie Capital analysts said that they believe OPEC will
come to a "last minute" deal, adding that failure to come to an
agreement could push prices below $40 a barrel, while a
successful deal would cause oil to rally into the low $50s.
In Asia, OPEC's biggest customer region, oil importers made
clear they would not be happy with an artificial supply cut that
hikes prices, and that in case of a cut they would seek more
supplies from outside OPEC.
In the United States, crude inventories fell by 717,000
barrels last week, data from the American Petroleum Institute
showed on Tuesday, compared with expectations for a 636,000
barrel increase. Cushing, Oklahoma, stocks rose by 2.4 million
The U.S. Energy Information Administration is set to release
inventory data on Wednesday.
(Additional reporting by Christopher Johnson in London and
Henning Gloystein in Singapore; Editing by Marguerita Choy and