* Gulf OPEC members seek new output target
* Iran wants individual country quotas
* Saudi-Iran tensions have ruined many past meetings
* Venezuela warns of price downside when outages ease
(Updates with Iranian oil minister quotes)
By Shadia Nasralla and Alex Lawler
VIENNA, June 1 (Reuters) - OPEC is set for another showdown
between rivals Saudi Arabia and Iran when it meets on Thursday,
with Riyadh trying to revive coordinated action and set a formal
oil output target but Tehran rejecting the idea.
Tensions between the Sunni-led kingdom and the Shia Islamic
Republic have been the highlights of several previous OPEC
meetings, including in December 2015 when the group failed to
agree on a formal output target for the first time in years.
Several OPEC sources said Saudi Arabia and its Gulf allies
would propose to set a new collective ceiling in an attempt to
repair OPEC's waning importance and end a market-share battle
that has sapped prices and cut investment.
"The Gulf Cooperation Council is looking for coordinated
action at the meeting," a senior OPEC source said, referring to
a group combining OPEC's biggest producer Saudi Arabia and its
Gulf allies Qatar, Kuwait and the United Arab Emirates.
Any agreement between Riyadh and Tehran would be seen as a
big surprise by the market, which in the past two years has
grown increasingly used to clashes between the political foes as
they fight proxy wars in Syria and Yemen.
Saudi Arabia effectively scuppered plans for a global
production freeze - aimed at stabilising oil markets - in April.
It said then that it would join the deal, which would also have
involved non-OPEC Russia, only if Iran agreed to freeze output.
Tehran has been the main stumbling block for the
Organization of the Petroleum Exporting Countries to agree on
output policy over the past year as the country boosted supplies
despite calls from other members for a production freeze.
Tehran argues it should be allowed to raise production to
levels seen before the imposition of now-ended Western sanctions
over Iran's nuclear programme.
Iranian Oil Minister Bijan Zanganeh said Tehran would not
support any new collective output ceiling and wanted the debate
to focus on the more radical idea of individual country
production quotas.
"An output ceiling has no benefit to us," Zanganeh told
reporters upon arriving in Vienna late on Wednesday and before
seeing any fellow OPEC ministers.
COUNTRY QUOTAS
New Saudi Energy Minister Khalid al-Falih was the first OPEC
minister to arrive in Vienna this week, signalling he takes the
organisation seriously despite fears among fellow members that
Riyadh is no longer keen to have OPEC set output.
At its previous meeting in December 2015, OPEC failed to set
any production policy including a formal output ceiling,
effectively allowing its 13 members to pump at will in an
already oversupplied market.
As a result, prices crashed to $27 per barrel in January,
their lowest in over a decade, but have since recovered to
around $50 due to global supply outages.
Those include declining output from U.S. shale producers
badly hit by low prices but also forest fires in Canada,
militant attacks on pipelines in OPEC member Nigeria and
declining output in Venezuela, also a member of the group.
Until December 2015, OPEC had a ceiling of 30 million
barrels per day (bpd) - in place since December 2011, although
it effectively abandoned individual production quotas years ago.
OPEC currently produces around 32.5 million bpd. Any ceiling
below that number would represent an effective cut.
"One of our main ideas (is) to have a country quota. But I
don't believe at this meeting we can reach agreement for this,"
Zanganeh said, adding that Iran was producing 3.8 million bpd
and would soon reach pre-sanctions levels of 4 million bpd.
Should OPEC fail to agree any policy on Thursday, it would
again convince the market that its main members could try to
raise supplies further to gain market share despite low prices.
UAE Oil Minister Suhail bin Mohammed al-Mazroui said oil
markets were still not close to rebalancing due to a severe glut
and a further price correction was possible.
The Venezuelan energy minister also warned that supply
outages have propped up prices in recent months but a global oil
glut might build up again when missing barrels return.
"More than 3 million barrels are out of the market. When
those circumstances are removed from the market, what's going to
happen?" Eulogio Del Pino told reporters in Vienna.
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