WASHINGTON (Bloomberg) -- OPEC would cut production if oil stays below $40 a barrel, said Chakib Khelil, the Algerian oil minister and former president of the group.

Khelil, in Washington, told reporters on Tuesday that the drop in oil demand is likely to end soon. If the price of oil remains at the current level, the world economy would suffer because oil production projects will be canceled, creating future shortages that will cause prices to surge, Khelil said.
Crude lost more than two-thirds of its value since peaking at a record $147.27 a barrel in July, as the global credit crunch slows economies around the globe, eroding demand for energy. March crude settled at $39.56 on the New York Mercantile Exchange on Tuesday.
“The anxiety over future oil market stability concerns us all,” Khelil said during a speech in Washington. “This intense volatility is in the interests of no one.”
Members of the Organization of Petroleum Exporting Countries delayed 23 percent of oil-and-gas production projects after prices plunged from last year’s record, Secretary-General Abdalla el-Badri told reporters in London on Tuesday. Khelil said Feb. 3 “there’s a 50-50 probability of further production cuts” at OPEC’s March meeting.
He told reporters on Tuesday that the price of oil should be between $60 and $80 a barrel by the end of the year, as demand recovers.
U.S. Inventories climbed 2.5 million barrels last week, according to the median of seven analyst estimates in a Bloomberg survey. Fuel use has declined the past year as the economy of the world’s biggest energy-consuming country contracted.
OPEC, which supplies more than 40 percent of the world´s oil, agreed to three supply cuts last year in an effort to halt sliding prices as world oil demand heads for its second year of contraction. The last was agreed Dec. 17 and took effect Jan. 1.