Acollection of oil ministers at Organisation of the Petroleum Exporting Countries (Opec) revealed dramatically contrasting opinions as to how to halt falling oil prices as some insist on increasing output instead of slowing production.

Saudi Oil Minister Ali al-Naimi u-turned on comments that he said at a conference in Australia last month on how he wanted Brent oil prices to trade at "around $100."

Despite, oil prices largely retreating since then, he has called for an increase in the industry group's output target, ahead of an Opec meeting on Thursday.

"Our analysis suggests that we will need a higher ceiling than currently exists," said al-Naimi in an interview with industry magazine Gulf Oil Review.

The call for increasing output is significantly opposed by Iraq's Opec President, Abdul Kareem Luaibi's concerns that there is a surplus in supplies from Opec and "it's very clear there is a tremendous surplus that has led to this severe decline in prices in a very short time span."

Oil Keeps on Slipping

Oil prices have slipped to some of the lowest levels this year, following concerns over a deepening eurozone sovereign debt crisis and waning global oil demand.

Both Brent and WTI oil prices has fallen for the fourth consecutive session.

Brent fell close to the lowest level of 2012 to $96.62 per barrel, while WTI is down 93 cents at $81.77 per barrel, after dropping to a low for the year at $81.07.

Opec has a production ceiling of 30m barrels per day and the 12 member group is currently producing oil at its highest level since 2008, which equates to 2 million barrels per day over this self-imposed target.

Growth versus Prices

The key issue to tackle at the next Opec meeting will be deciding on the increasing, decreasing or maintaining its production ceiling.

Apart from Saudi Arabia, Opec countries like Iran and Iraq, need oil well above $100 per barrel to balance budgets and are keen to keep prices high to maximise revenues.

In particular, Iran's output has fallen to its lowest levels in 20 years, after struggling against Western sanctions imposed from its nuclear issues, while the remainder of the Opec cartel have picked up the slack in production.

Although, oil prices are weakening, it probably doesn't come as too much of a surprise that Saudi Arabia, which has the reputation of being moderate on oil prices are not calling for cuts in production just yet.

"Our actions have helped the oil price drop from $128 per barrel in March to about $100 today, which has acted as a type of stimulus to the European and world economy," said Naimi. "Given our large crude oil reserve situation, we certainly want to see a sustained market for crude oil over the long term."

What the Analysts Say

Barclays' analysts say that they do not detect any particular urgency in the market to take Saudi Arabia on and test the full extent of the downside.

"First, there is a wide perception that Saudi Arabia itself knows that it is currently producing above an equilibrium level, and that 1 million barrels per day of output could be withdrawn fairly rapidly," said Barclay's analysts in a note. "Being caught short when the Opec basket is below $95 and when Saudi Arabia makes such an announcement does not seem an attractive prospect. Second, there is a general view that, even with the current high level of Opec output, the global balances for Q3 still appear reasonably supportive. On our estimates, the call on Opec crude is likely to average 1.8 million barrels per day higher in Q3 than it did in Q1."

However, analysts at Goldman Sachs say that oil prices are set to increase on political risk and exhausted supply.

"Despite the notable slowdown in global economic growth, we continue to expect that oil demand will grow well in excess of production capacity growth," said analysts at Goldman Sachs in a note. "In our view, it is only a matter of time before inventories and Opec spare capacity become effectively exhausted, requiring higher oil prices to restrain demand, keeping it in line with available supply. Further, as tensions between Iran and the West escalate, the risk to crude oil prices is becoming increasingly skewed to the upside."

Meanwhile, analysts at JP Morgan highlight the importance of Iraq and its output and how this could change the dynamic of market rebalancing and therefore prices.

"The continued expansion of Iraqi production to between 3.4m barrels per day and 3.6m barrels per day by the end of 2012 suggests that early in 2013, Iraq will have rebounded to levels seen before the first Gulf War, " say analysts at JP Morgan in a note. "With a strong call on OPEC projected throughout the second half of 2012 and all of next year, there seems little reason to be concerned. However, should economic growth falter, or supply growth prove stronger than expected, then it could be important."

"Saudi Arabia is assumed to take the key swing producer role for any minor rebalancing that is needed to stabilize the market; it remains to be seen whether such an assumption remains valid in 2013 when Iraqi production exceeds Iranian production targets and when its growth could threaten a structural shift in Opec production volumes," they added.