OPEC makes deepest oil cut ever to rescue prices

Oil below $50 is uncomfortable for all producing nations, but especially for OPEC members Venezuela and Iran which are dependent on higher prices to fund ambitious domestic programs.

OPEC hopes that a sharp supply cut will set oil on the path toward $75 -- a level the group believes is needed to encourage investment in future supply.

"You must understand the purpose of the $75 price is for a much more noble cause," the Saudi Oil Minister said. "You need every producer to produce and marginal producers cannot produce at $40 a barrel."

The influential Saudi Oil Minister clearly outlined the kingdom's route to lower production.

It is pumping 8.2 million bpd against 9.7 million bpd in August. Saudi Arabia's implied output target is about 8.477 million bpd under existing OPEC curbs.

To have a lasting price impact, any OPEC deal must to be strictly observed.

According to independent observers cited in OPEC's monthly report on Tuesday, the group's compliance in November to existing cuts was only just over 50 percent.

OPEC has encouraged other producers to cut back too. Russia and Azerbaijan attended the Oran meeting as observers and have said they could rein in exports in future, but stopped short of am immediate pledge.

Leading a high level delegation, Russia's Deputy Prime Minister Igor Sechin said in a speech to OPEC that Moscow did not plan to join in coordinated output cuts and did not want to join the group in the foreseable future.

(Additional reporting by Simon Webb, Katya Golubkova and Alex Lawler in Oran, Randy Fabi in Abuja, writing by Peg Mackey, editing by William Hardy)