NEW YORK - CRUDE oil surged more than two dollars on Monday on growing signs that Opec will announce production cuts at a meeting this week in a bid to shore up falling prices amid a global financial crisis.

New York's main contract, light sweet crude for delivery in November, jumped US$2.40 to close at US$74.25 (S$109.67) a barrel.

In London, Brent North Sea crude for December delivery climbed US$2.43 to settle at US$72.03 a barrel.

'Of course Opec's largest customers, the industrialised countries, will find any cut in output hard to accept. The drop in oil prices has been their only bright spot, of late, in a flurry of dire economic revelations.'

Crude prices have halved in value from record highs of above US$147 struck in July, prompting calls from key Opec members that the oil cartel should cut its output targets when it meets on Friday in Vienna.

They slumped below US$70 on Thursday for the first time in more than a year, dragged down by prospects of reduced demand in the face of a global economic slowdown stemming from the world financial crisis.

'Opec will agree to cut production when it meets, arguing that it needs to prevent a (further) price collapse,' energy consultancy CGES said on Monday in its latest monthly report.

Iran's ambassador to the Organisation of the Petroleum Exporting Countries on Monday floated the idea that the cartel may agree to cut oil production in stages at the meeting, the official IRNA news agency reported.

'Different figures (for the size of cuts) are being talked about among Opec members,' Mr Mohammad Ali Khatibi was quoted as saying, adding that suggestions range from reductions of one to three million barrels a day.

'If three million barrels are cut at one time from Opec's production, the market will recover, but there is a possibility that this cut will occur in a number of stages and it appears that Opec is ready to cut a million barrels per day in the first stage,' he said.

Opec member Libya said on Monday it backed a production cut of more than one million barrels of oil per day.

'A cut in production by one million barrels per day is not enough to re-establish equilibirum on the market,' Libyan Oil Minister Shukri Ghanem told AFP.

'One million (barrels per day) is little. Offer exceeds demand by much more than one millon barrels per day,' Mr Ghanem said, adding that he opposed cutting production in stages.

On Sunday, Venezuela lent its support for an output cut by Opec, whose members together pump about 40 per cent of the world's oil.

'Our position for the past 10-plus years has been that we have to manage oil production,' Venezuelan President Hugo Chavez told AFP.

'Now that the prices are coming down, we are going to take (to Opec) the proposal of cutting production,' he added.

Opec, led by the world's biggest oil exporter Saudi Arabia, has not officially indicated whether production levels would be altered at the meeting in the Austrian capital but its current chief Chakib Khelil said over the weekend that the cartel should order a 'substantial' cut.

'I think it is kind of funny that Opec wants to defend the US$70 to US$80 a barrel range because when the price first hit these levels they said the price was too high' and blamed 'evil speculators' for driving up prices, said Mr Phil Flynn at Alaron Trading.

'Now the cartel is addicted to these prices that they said made no sense and now are desperately trying to defend them,' Mr Flynn said.